BEIJING, Feb. 28 -- China's largest property developers have been offering
discounts and other incentives to fight shrinking sales and the credit crunch
since the end of last year.
Vanke Co Ltd, the largest developer on the mainland by assets, announced an
across-the-board discount of over 5 percent for 10 of its properties in Shanghai
on Lantern Festival (Feb. 21) that traditionally marks the end of the lunar new
year celebrations. It is the first time the company offered such a large
discount in the city.Vanke is offering even better terms for cash buyers. A
sales clerk at one of the company's offices said those paying the full amount in
one go will get as much as 8 percent discount. Those who can cough up half of
the price as down payment will get a 6 percent discount, she said.
In Beijing, two of Vanke's projects were offering 5 percent to 7 percent
discounts on one-off payments during Spring Festival.
The unprecedented festival discounts seemed to work. Vanke raked in 257
million yuan on the lunar New Year's Day, compared with the company's 70 percent
dive in sales from December 2007 to 1.85 billion yuan in January, according to
More importantly, industry insiders said, such a strong promotional offer
by a major developer in the city indicates the market will continue to be bleak
in the months to come.
Besides, the success of Vanke's promotion is expected to prompt other
developers to follow suit, experts said.
Chen Sheng, director of China Real Estate Index System, said many other
real estate developers may follow Vanke's example by offering more discounts.
Sure enough, Shanghai-based Jing Rui Properties (Group) Co Ltd has also
lowered its prices by offering a 3 percent discount for group purchases and a 2
percent discount for those recommended by previous buyers.
Hopson Development, a Hong Kong-listed real estate firm, picked out several
apartments for sales promotion in Beijing, cutting down prices from 30,000 yuan
per sq m to 22,500 yuan per sq m.
A project developed by Beijing-based Huayuan Real Estate is offering an
over 7 percent discount for those buying small apartments.
Coastal Greenland group, also a Hong Kong developer, reduced its prices for
new projects in Beijing as early as December, lowering them by around 400 yuan
per sq m from the average of 17,000 yuan per sq m in the area.
Because of an uncertain economic outlook this year, including a possible
recession in the US, a likely slower growth rate for the Chinese economy, rising
inflation and tighter monetary policy, a number of large developers are trying
to sell quickly and then take over other projects and smaller developers when
the market dives, industry analysts said.
Some of them, however, are eager to sell off their projects to jazz up
"Sales of high-end projects will face a big challenge this year as most
buyers are investment-oriented," said Zhang Lei, a marketing professional with a
developer that has several high-end projects going in Beijing.
But according to Pan Shiyi, chairman of SOHO China, property projects with
good locations are likely to continue to be popular while prices of low-end
properties are most likely to be dragged down with the entry of more affordable
Luo Xiaohua, general manager of Jing Rui Properties, said: "We won't
clearly see where housing prices are heading this year until April, after a
clearer real estate policy will be announced in the annual sessions of the
National People's Congress and the Chinese People's Political Consultative
But land prices in Shanghai dropped sharply recently. Tishman Speyer
Properties acquired a plot of 267,481 sq m in New Jiangwan Town at a starting
price of 7,500 yuan per sq m in January, with no competition. Any plot in the
same area would command 12,500 yuan per sq m last June and 20,000 yuan in
"This indicates sliding housing prices in one to two years," said Luo.
Because of a weakened market, small and medium-sized property developers
are the most nervous as they are faced with more financing pressure compared
with listed companies, with commercial banks taking tighter measures to rein in
(Source: China Daily)