Developers Still Rushing to Dump Inventory

Globe & Mail: Buy now, get a free Porsche: Chinese developers rush to sell surplus properties
Hopson Development Holdings Ltd. in May offered a free Porsche or discounts of as much as 11 per cent to the first 30 buyers of apartments in a complex in southern China. Evergrande Real Estate Group Ltd. is letting homebuyers cancel purchases and get all their money back any time before they move into their flats.

Such offers underscore the urgency among developers as they seize on a nascent rebound in sales and prices to generate cash and reduce record debt. Whether the recovery will gain traction is far from clear: While sales across the country jumped 32 per cent in May from a year earlier, construction and property investment remain subdued.
While May home sales in Beijing increased sharply over last year, sales in smaller cities are still falling. Some developers think the government's efforts would last three months and we're nearing the end of those three months. If there are seeds of a recovery being planted, clear signs should start emerging by July at the latest, with some developers at least shifting their opinion, if not turning positive on investment. Meanwhile, stocks have to remain in a bull market, since the stock market is now a pillar of support for real estate.

No comments:

Post a Comment