The stakes are too high to let Evergrande fail. Here’s why
Hong Kong CNN Business —
Some Chinese property developers are going to extreme lengths to attract buyers.
From accepting grain or garlic as part payment, to offering live pigs as an incentive to buyers, the unusual sales tactics underline the dire state of China’s vast real estate industry. A collapse in sales has accelerated since developer Evergrande defaulted on its debt last year as the economy has slowed.
Central China Real Estate, the largest developer in the central province of Henan, said in a recent advertisement that it will accept down payments of wheat for houses in Minquan county.
The ad was posted on the company’s official WeChat account this week. Buyers can use the grain to offset as much as 160,000 yuan (nearly $24,000) of their down payment. The new homes the company is offering sell for between $100,000 and $124,000, according to Leju Holdings, a real estate services provider.
Wheat isn’t the only pantry staple that is part of the developer’s promotion campaign.
In a separate ad last month, the firm said that it was willing to accept garlic as down payment for a residential project in Qi County in Henan province.
“On the occasion of the new garlic season, the company has made a resolute decision to benefit garlic farmers in Qi County,” the firm said in a post on WeChat late last month. “We are helping farmers with love, and making it easier for them to buy homes,” it added.
Henan province is a major production hub in China for both wheat and garlic.
Central China Real Estate did not respond to a request for comment, and deleted its wheat ad from WeChat on Wednesday. The campaign has been widely reported in Chinese media, and was trending on social media.
“This is a hard evidence how weak housing demand is,” said a Weibo user on Tuesday.
China’s property market is in a deep slump, hit by a slowing economy, strict Covid restrictions, and a debt crisis that is spreading among developers. Property sales fell 31.5% from January to May, accelerating from the 21% drop recorded for the first four months of this year, official data showed last week.
A recent survey by China Real Estate Information, a private research firm, indicated that sales by the country’s top 100 developers collapsed 59% in May from a year ago.
Authorities have stepped up efforts to revive home sales by lowering mortgage rates and easing rules on home purchases.
Meanwhile, more developers are coming up with imaginative ways to spur sales.
Poly Real Estate, one of the country’s top developers, said it would gift buyers a 100-kilogram (220-pound) hog if they purchase a home at its residential project in Lianyungang city in eastern Jiangsu province. The company even offered to have the pig slaughtered for customers.
“Buy a house and get a 200-catty ‘Peppa’ pig. Get a good life in one stop,” read the ad, posted on the firm’s WeChat account last week, using the popular British cartoon character to refer to the hog.
A “Catty” is a traditional Chinese unit of weight and equals 500 grams. A 200-catty hog is worth around 1,630 yuan ($242), based on latest government pricing data. Houses in the project cost between $184,000 and $260,000, according to Leju’s data.
Poly Real Estate did not reply to a request for comment.
Pork is the essential meat in China, and the country produces and consumers the most pork in the world.