China property

Evergrande, China Overseas Land cited for ‘illegal sales and malicious speculation’ in Jinan

The two Chinese developers were named on Chinese housing ministry’s website as engaging in sales tactics that contributed to panic buying

PUBLISHED : Monday, 03 October, 2016, 9:51pm
UPDATED : Tuesday, 04 October, 2016, 8:00pm

China Evergrande Group and China Overseas Land & Investment have been cited by the country’s housing ministry for engaging in sales tactics and behaviour that have cause panic buying.

Evergrande’s “Yufeng” and “Binhe Left Bank”, as well as China Overseas’ “International Community” project in Shandong’s provincial capital of Jinan city, were highlighted for “illegal sales and malicious speculation,” the Ministry of Housing & Urban-Rural Development said on its website on Sunday.

“The behaviour seriously disrupted order in the property market,” the ministry said, asking local authorities to investigate the cases and punish the developers, without giving further details.

Evergrande’s public relations officer in Cuangzhou declined to comment.

The reprimand follows administrative measures that several city authorities have rolled out in recent weeks to cool China’s overheated property market, to prevent runaway prices from leading to inflation and spilling over to social unrest.

Home prices rose in September for the 17th consecutive month, according to official data, and the market frenzy shows no signs of abating.

Aggressive promotions backed by exaggerations of market demand are believed to be one of the major reasons for triggering panic buying.

On October 1, the first day of China’s week-long public holiday, thousands of buyers flooded an online auction organised by China Overseas for its “International Community” apartments.

The developer’s sales staff informed buyers in late August that the selling price would be 9,000 yuan per square meter and the apartments would be allocated via a lottery system.

By October, the price had surged to 13,000 yuan per square meter for the same property, and the sales had been changed into an auction, a buyer was quoted by local media as saying.

In Jinan, new home prices rose 4.2 per cent in September, according to research firm China Index Academy, one of the fastest among Chinese cities, outpacing bigger cities like Shanghai and Beijing.

On September 29, Jinan introduced eight new property policies, including giving guidance on selling price to certain projects, raising the deposit requirement for developers’ land bidding, and banning developers from taking deposits before they obtained pre-sale permits.

Beijing and Nanjing have also started to check irregularities include property hoarding, misleading sales information since late September.

In the latest move, China’s housing ministry has published a list of 45 developers and property agencies that have breached sales regulations.

The crackdown on illegal sales is “merely a symbolic gesture” as a part of local authority’s response to the central government’s call to calm the market, said David Hong, research head at China Real Estate Information.

“Property sales in China has been lacking in regulations for a long time,” he said, adding that the problem can only be solved when the market matures. “It won’t improve overnight.”

Fraud is not new in China’s property sales. A developer was exposed last month to have exaggerated its sales results when it claimed to have sold all of its 6-square meter apartments in Shenzhen. It actually sold 40 per cent of them.

Country Garden, a leading Guangdong developer, allegedly used counterfeited seals and signature to obtain a sales permit for a new project in Guangxi province in May, according to the city’s government.