Some Beijing Developments Only 1/3 Sold In Two Years

Some Beijing real estate developers have failed to sell more than one-third of their homes, even though the projects hit the market in 2013.

According to numbers from the Beijing government, there were 227 projects that received pre-sale permits in 2013, which allow developers to sell homes before construction is finished (in some cases before it starts). Of those, less than 10% have sold out. About 50% have become finished homes and of those, about 20% are selling very slowly.

In Yizhuang, there is a project with 1300 properties, including commercial space. Only 100 have been sold to date. In Mapo, Shunyi district, there's a project that launched in 2011, it has launched 4 times, and still has only sold about one-third of its 600 properties.

"Beijing commercial housing supply several large areas, such as Tongzhou, Yizhuang, Fangshan, and Dongba, Creek area, if the real estate products less competitive, it is difficult to digest the inventory, especially difficult for projects that have sales difficulties. "Beijing Housing Association Secretary-General Chen told reporters.

"A lot of commercial and residential projects greater pressure to the stock." Ya Ho agency Guo Yi, director of marketing analysis, the current inventory of commercial and residential markets up to 36,800 units, the highest level since 2006, nearly 10 years, one quarter of residential 3/1 of supply and demand, and in 2014 was 2: 1 in 2013 to 0.85.

Although the article doesn't mention it, this inventory overhang may be partially the result of China's housing laws. Last month, there was an article about this, which I covered in After 40 Years, Who Gets Your House?

In Beijing, homes are given a 70 year property right, but commercial property only gets 40 years. Mixed use property, with both commercial and residential property, only has a 40 year right to the land. With the reform and opening now headed into its 38th year, Chinese are starting to ask what happens when year 40 comes due?

Already, existing homes in falling under commercial property rules are selling at a discount to similar properties next door that have the 70 year land rights. One issue is that according to law, the 70-year right will renew at expiration, but no such provision exists for commercial property

Back to today's article: although home sales picked up in April, the developers remain anxious and are acting as if they don't believe the good times will last. High end projects were trying to keep prices elevated by offering only a small amount of property at a time for luxury homes, but now they're dumping them all onto the market:

However, the developers but did not feel so relaxed. "It's hard to judge this wave of market can continue until when, so now most developers are rushing to sell, especially in comparatively oversupplied high-end market, in the past that once opened only ten suites practice not now fit. "Beijing a high-end real estate sales official told reporters.

iFeng: 部分项目两年仅售出1/3 北京楼市去化之痛