Hong Kong developer warns of brewing price war in mainland China market as coronavirus hurts home sales, chokes cash flow

Wharf (Holdings) said a price war in the mainland China market is brewing because builders are desperate to improve cash flow after the coronavirus outbreak choked home sales this year.

The property and logistics group, controlled by Hong Kong billionaire Peter Woo Kwong-ching, is cautious about adding to its 3.6 million sq m of land bank in the world’s second largest economy, after calling its business this year a “washout,” with sales having crashed by more than 50 per cent since the start of the year.

“More than half of our sales in China have been wiped out in the first two months as compared to that in last year,” chairman and managing director Stephen Ng Tin-hoi said. “We may see mainland developers keen to slash prices and rush to sell as some of developers’ liquidity rely largely on home sales.”

The coronavirus outbreak has pushed the nation’s property market to near a standstill after authorities imposed drastic economic and social curbs to contain the biggest public health crisis in decades. China locked down many cities in central Hubei province, the epicentre of the epidemic, before it became widespread globally.

The warning follows a move by China Evergrande last month to discount its flat prices by 25 per cent across the board, in what China’s third-largest builder said as the biggest-ever nationwide price cut.