Shenzhen developers target Hong Kong homebuyers amid weak April sales from local buyers

With borders now open, Shenzhen and other cities in the Greater Bay Area are increasing marketing in Hong Kong to revitalise a weak market
Shenzhen developers have been especially keen to attract Hongkongers after a local policy shift failed to reverse falling sales of lived-in homes

China property

Yulu Ao

Published: 8:00am, 8 May 2023

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Chinese developers across the Greater Bay Area are intensifying their marketing of high-end properties to Hong Kong residents amid slow sales growth in the region, including in Shenzhen, where a recent policy shift failed to revitalise the market.

Property developers in Shenzhen offered more promotions last month in Hong Kong, where residents have shown increasing interest in mainland properties since the border reopened, given convenient transport options and lower home prices, said Sammy Po Siu-ming, CEO of Midland Realty’s residential division for Hong Kong and Macau.

Inquiries from Hong Kong buyers soared in April, according to agents. Midland said it has received about 100 inquiries per week concerning Shenzhen projects, while Centaline also said that they gave Shenzhen property tours to about 100 potential homebuyers each week.

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Such property tours in the Greater Bay Area became more popular for Hongkongers in the first two months after the border reopened. Buyers have shown even more interest in homes in Zhuhai and Zhongshan owing to lower prices, with some flats selling for below 1 million yuan, but Shenzhen has the added advantage of sharing a border with Hong Kong.

East Pacific Group is among the latest Shenzhen-based developers to hold sales promotions in Hong Kong. It sold 11 units out of 30 on offer during the May Labour Day holiday, with an average price of more than 7.9 million yuan. Half of those units were snapped up by Hong Kong buyers at a 15 per cent discount.

“Sales were sluggish, dragged down by the soft spending of local buyers during the Covid-19 pandemic. Thus some developers across the Greater Bay Area have pinned their hopes on Hong Kong buyers purchasing ‘high-end homes’,” said Midland’s Po, who added that six or seven other developers are in discussions with the realtor to market their Shenzhen projects in Hong Kong.

“Shenzhen has seen a wavering housing market in recent months, which has added pressure to mainland developers and pushed some of them to turn to the Hong Kong market,” said Andy Lee Yiu-chi, China CEO of Centaline Property Agency.

New home transactions in Shenzhen reached 3,505 last month, up 9.6 per cent over March, according to data from Centaline. But lived-in home sales tumbled 19.2 per cent to 3,192 – the largest month-on-month drop since May 2022.

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“In the past, the projects in Shenzhen could sell out locally, and naturally they have no need to do marketing events in Hong Kong,” Lee said. “But sales growth slowed in April, and that’s the reason we see some Shenzhen developers starting to target Hong Kong buyers now.”

Just three weeks ago, China’s southern tech hub took a rare step in lifting curbs on lived-in home transactions, aiming to ease pressure on the property market. Under the move, loans are no longer pegged to a government reference price that was introduced in 2021, which could allow homebuyers to receive mortgages based on the actual transaction price with a lower down payment.

The change was welcomed by local property agents and industry players who believed it would be a boon to the market. Last year, lived-in home transactions fell to 20,000, the lowest in 20 years, after halving to 40,299 in 2021.

However, last month’s weak sales have dented the confidence of market watchers. “We can see that mainland homebuyers take a wait-and-see approach and still have a long decision-making period,” said Lee.

Nationwide, the housing market has also been gloomy. New home transactions across 30 cities fell 27 per cent last month, while lived-in home sales across 17 cities fell 17 per cent, according to a report published last week from Chinese real estate consultancy China Real Estate Information Corp (CRIC).

“On the supply side, the probability of weak demand and a lack of improvement in the future remains high, and overall home transactions in China are likely to go down,” CRIC said in the report.