Buy a Flat, Get a Free Porsche as China Developers Rush to Sell

on June 17 2015 | in Daily Headlines Trending | by | with No Comments

China’s debt-riddled developers are turning to incentives like luxury cars as they rush to shed an inventory of unsold homes about seven times the size of Manhattan.

Hopson Development Holdings Ltd. in May offered a free Porsche or discounts of as much as 11 percent 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 percent in May from a year earlier, construction and property investment remain subdued.

“By taking this opportunity of a mild improvement in sentiment, developers are trying to sell quickly to get more liquidity,” said Kaven Tsang, a Hong Kong-based senior analyst at Moody’s Investors Service.

Generous incentives to lure buyers are common in China, however the wobbly state of developers’ finances is adding to the urgency to clear inventories of unsold homes that stand at a three-year high of 430 square kilometers (166 square miles).

Among 25 major Chinese developers tracked by Bloomberg Intelligence, only two generated positive cash flow from operations and investment in 2014. Meanwhile, their combined net debt jumped to a record 919 billion yuan ($148 billion).

Read more at Bloomberg Business.

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

« »

Get Your Copy of the June 2015 China Consumer & Retail Monthly

Follow Us

Daily Updates By Email

Latest Posts

Scroll to top