Chinese Developers "Destocking" Desperation: Bikini-Clad Model Car Washes, iPhones, & Alibaba Discounts
We have presented numerous examples of the turmoil under the surface of China's unprecedentedly placid GDP headlines but, as The FT reports, the desperation of property developers should be the biggest canary in the coalmine that all is not well. Developers began cutting prices this year but have so far failed to revive flagging volumes and so are increasingly resorting to creative sales tactics to drum up interest. From discounts on Alibaba purchases up to $325,000 to car-washes by bikini-clad models, as "putting full effort into destocking has become the common choice of most developers. They’re still not optimistic about the market situation." So why are US investors so upbeat about China's 'recovery'?
As The FT reports, things are not well in the China real-estate market...
Residential property sales fell 9.4 per cent in floorspace terms in the first seven months of the year compared with the same period in 2013, according to government statistics.
Developers began cutting prices this year but have so far failed to revive flagging volumes. More than 30 cities have also removed purchase restrictions introduced in 2010 to restrain price growth amid public anger over high prices.
And developers are desperate...
Scary China real estate data point #527 in an unending series: sales volume in top 30 cities down 31% YoY in July pic.twitter.com/AaAA8LIOWA
— Tom Orlik (@TomOrlik) August 25, 2014
Developers are increasingly resorting to creative sales tactics to drum up interest.
In the latest sign of Chinese developers’ desperation to unload inventory into a weak property market, China Vanke Co is offering discounts of up to $325,000 to homebuyers who shop on Alibaba’s Taobao, an e-commerce platform.
The country’s biggest developer will give discounts that match shoppers’ spending of up to Rmb2m ($325,000) on the eBay-like service. Homes in real estate developments in Beijing, Shanghai, Guangzhou and Chongqing, among other cities, will qualify, according to an advertisement on Taobao’s website.
An office tower in Henan province offered car washes by bikini-clad models to people who referred a friend to the building’s account on WeChat
A residential developer in Wuhuan offered new iPhone 6s to potential buyers who showed up at the sales office.
Not exactly signs of optimism...
“Putting full effort into destocking has become the common choice of most developers. They’re still not optimistic about the market situation,”
The inventory build-up may get worse before it gets better. Several developers noted in their recent half-year reports that September and November will be a peak period for new housing completions. That will add to the supply overhang and increase pressure on developers to cut prices.
* * *
But apart from that... China's PMIs say everything's great, right?
- advertisements -