Chinese developers lure homebuyers with gimmicks
New strategy makes buyers feel like winners without eroding mainland players' profit margins
Mainland developers are turning to offbeat marketing gimmicks and giveaways as they battle to shift massive inventories of unsold homes and survive the country's economic slowdown.
Discounts could still run into the hundreds of thousands of dollars, but instead of smashing competitors on price, the emerging trend for the mainland's property marketing was simply to create a buzz around new projects, analysts said.
"Consumers are too used to price cuts and promotions like 'buy one get one free', so they want new gimmicks," real estate consultancy Knight Frank senior director Thomas Lam said.
The strategy leaves developers' already squeezed margins largely intact, while making buyers feel like winners.
"Although there are many innovative promotions in the market, they translate to an average discount of 10 per cent; it's not that big," industry consultant China Real Estate Information Corp analyst Fang Ling said.
The mainland's largest residential developer, China Vanke, is using social media in a series of quirky campaigns that chief executive Yu Liang describes as "innovation based on grassroots".
In a campaign similar to Tourism Australia's "Best Jobs in the World" promotion, Vanke plans to offer free accommodation for a year in some of its new apartments, as long as its guests share their experiences on sites like Weibo, the mainland's largest microblog by users. It has already offered its "free-stay experience" for one-day and seven-day stays.
Vanke also renewed an association with Alibaba Group Holding's online marketplace Taobao last week in Chengdu to lure shoppers with special offers and discounts.
From August 25 to the end of September, Vanke gave online shoppers a discount of at least 50,000 yuan (HK$63,200) when they bought a home featured in one of its 23 projects across 12 cities. Discounts went as high as two million yuan for those who had spent the same amount on Taobao in the previous year.
The firm sold 1.3 billion yuan worth of flats from the promotion, Yu said last month, with an average discount of 42,000 yuan or about 2 per cent.
"Vanke is making use of the mentality, tools and methods of the internet to do our business better," Yu said.
China Merchants Property Development this month launched a three-month campaign to allow customers who shop with the company's affiliated credit card to earn discounts of up to 300,000 yuan on property purchases.
Last month, Poly Real Estate launched a promotion that gave discounts of 10,000 yuan for every kilogram of weight a homebuyer lost.
Official figures released last week showed growth in the mainland's real estate investment slowed in the first nine months of 2014, while property sales and new construction tumbled, helping to drag economic growth to almost a six-year low.