Speculators zoom in on Shenzhen to flip new homes for quick profit, raising warning of ‘grey rhino’ risks and regulators’ ire
- Five of the seven projects that launched last week sold out, with as many as 33,000 new homes being sold this year as at the end of October
- At CR Land’s project in Nanshan district, the average price for new homes was capped at a 28 per cent discount to the market, which created an immediate windfall on paper of 5 million yuan for a 100-square metre flat
Shenzhen, the crucible of China’s economic reforms and the nation’s technology hub, is seeing a buying frenzy in residential property, as a government-imposed price cap created arbitrage opportunities for speculators to make quick profits.
At CR Land’s CR City project in Nanshan district, the average price capped at 130,000 yuan (US$19,760) per square metre was 28 per cent cheaper than the neighbourhood’s prevailing market price . That attracted more than 10,000 bidders, helping the state-owned developer sell all 1,000 units within half a day on November 25 . Lucky buyers stand to make an immediate windfall on paper of 5 million yuan for a 100-square metre (1,076 square feet) unit.
“Everybody is catching a ride on the gravy train,” said Li Yujia, senior economist with the Real Estate Assessment and Development Research Centre in Shenzhen. “When people keep flocking into the property market, how do you expect Shenzhen’s housing market to cool down?”