Property tycoon Pan Shiyi issued a rare critique of China’s real estate sector, describing its development model as a “Ponzi scheme” and urging the industry to restore integrity and better protect homebuyers, just days after a fraud trial saw a guilty plea from the founder of China Evergrande – the US$300 billion debt juggernaut whose 2021 collapse triggered a systemic property meltdown.

Writing from the United States on Thursday via his personal WeChat account, Pan reflected on the trajectory of China’s property market over the past three decades, saying the sector had “all but collapsed”.

He estimated losses at trillions of yuan and claimed that the roots of the crisis lie in a “Ponzi-like” model, referring to a form of fraud that pays existing investors with funds collected from new investors.

“For the property market to recover, confidence is the most important factor,” he wrote. “When dealing with legacy issues, homebuyers must come first.

“If buyers pay for homes but fail to receive them, confidence in the market will be completely lost, and recovery will be impossible.”

Pan, who rose from modest beginnings to co-found SOHO China – one of the country’s leading commercial property developers – in the 1990s, became a prominent figure during China’s property boom. He has resided in the US since 2022, when the sector was in the midst of a crisis and Beijing was tightening policies to crack down on developers’ high reliance on debt for growth.