Developers Offer Luxury Freebies in Bid to Attract Buyers
In the current environment, liquid funds are tight and potential funding avenues are narrowing. In a sign of the growing severity of the situation, news is emerging that several property developers are offering discounts and luxury cars to potential buyers.
China Merchants Shekou Industrial Zone Holdings Co. is giving away a BMW Series 3 or X1 to buyers who hit a certain threshold. A buyer who receives a car with a ￥3.1 million purchase, for example, is essentially receiving a 10% discount.
China Evergrande, meanwhile, is offering a basic 11% price cut, in addition to other perks that push the actual discount closer to 26%. The developer is also requiring just a 5% down-payment, as opposed to the usual 30% required by local governments.
The giveaways and discounts are only the latest sign of the industry’s struggle to maintain a high stream of revenue in the face of ongoing regulations and sluggish sales. The sector is facing over a ￥150 billion maturity wall in the first quarter of next year.
"Financing is becoming hard for everyone, even including the giant players," said Sabrina Wei, Head of Northern China Research at Cushman & Wakefield in Beijing. "They need discounts to boost sales and collect cash."
"Property projects are no longer an easy sale,” said Wei. "We may soon see this prolonged upbeat property season behind us."
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