Bricks and Mortar

Developers resort to sales tricks on the fly to attract buyers

Investors move to the tier-one cities as firms try to sell off units in oversupplied lower-tier areas

PUBLISHED : Tuesday, 01 July, 2014, 4:11am
UPDATED : Tuesday, 01 July, 2014, 6:57am

An offer of free helicopter rides for prospective buyers shows the sky is the limit for marketing gimmicks that are coming thick and fast from developers as the mainland housing market heads for a deep correction.

Seeking to drum up sales, Huaqiang Real Estate provided the rides as part of promotions for a project in Wuhu, Anhui province, last week.

The hundreds of people who lined up outside the developer's sales office showed the marketing staff got it right. The flights gave prospective customers a view of community facilities and infrastructure to be built in the area - and persuaded some of them to sign purchase agreements.

In Nanjing, a developer organised a long jump competition to attract market attention. As part of a range of sweeteners tied to the event, buyers who jumped the farthest at the sales office were rewarded with discounts from 1,000 yuan (HK$1,249) to 10,000 yuan.

In Hangzhou, Shimao Property has come up with a more down-to-earth inducement. It is offering buyers of its New West Lake residential project a 12-month rental subsidy, or up to 12,000 yuan, while awaiting for delivery of their homes.

In a similar vein, Poly Real Estate is allowing buyers at two of its projects in Hangzhou, Luolanxiangju and Hutongyu, to defer the 30 per cent deposit for a year after signing the purchase agreements.

While the marketing tactics are coming in many guises, they all attest to the eagerness of developers to offload their projects to generate cash flow amid credit tightening.

Investors are retreating to first-tier cities, as the slowdown in the real estate market deepens, the annual Mainland China Cities Survey 2014 from the Urban Land Institute indicates.

The survey, which evaluates the real estate investment and development prospects in 36 of the largest cities, recorded an average 8.5 per cent drop in rating for each city, indicating a more pessimistic outlook overall compared with last year's findings. However, surveyed investors remained confident of the prospects for first-tier cities Shanghai, Shenzhen, Beijing and Guangzhou.

The surveys were undertaken when the property market was entering the initial phase of a sharp downturn.

Sales of new homes in the first four months of this year fell 8.6 per cent year on year to 1.45 trillion yuan, and total floor space transacted dropped 9.7 per cent to 245 million sqmetres, National Bureau of Statistics data shows.

In addition, the institute said, many investors had become increasingly concerned about a glut in housing supply in second and third-tier cities.

Developers that rushed into these cities - on expectations of greater growth potential - now find themselves contending with oversupply in these markets. And margins have been squeezed by price corrections. The golden rule of location, location, location proves its worth when it comes to property investment.

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