China realty goes BOGOF
Posted by Zarathustra in China economyon Oct 10th, 2011 | 4 comments
The National Day Golden Week is ended in China. Traditionally, the Golden Week (or more broadly, September and October) has been a peak season for real estate sales for China.
No longer.
The increasingly tough purchase restrictions in some cities and credit and monetary tightening have crushed the transaction volumes across the country for the best part of the year, even though prices haven’t moved much lower on the whole. Nonetheless, real estate developers are already feeling the impact of low transaction volume, namely problems with their inventory build up and cash flows as they are unable to sell as many properties as they planned. Developers have probably counted on September and the Golden Week, but the Golden Week has turned sour.
Shanghai, for instance, experienced the worst Gold Week holiday in 6 years. Only 398 units were sold in the primary market for the entire the 7-day long holiday, which is only 20% of the same period of last year (in other words, sales dropped 80% year-on-year) according to cnyes.com. According to Xinhua, one developer in Jinan tried to sell their flats by offering gifts like iPads and other electronic products, but without much success. Beijing has been doing somewhat better according cnyes.com, as 866 units were sold in the first 6 days of Golden Week, only 10% fewer than last year, but 62% lower compared to the first week of September. In Nanjing, one developer even offered a buy one (house) get one (flat) free (BOGOF) according to Xinhua, as that developer has failed to sell those houses since December of last year.
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