In China, some 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.
One advertisement of Henan-based Central China Real Estate that had “swap wheat for house” in the title says buyers can use the crop, priced at 2 yuan per catty, a Chinese unit of mass equal to roughly 500 grams, to offset as much as 160,000 yuan of down payment in one of its developments.
Late last month, another Central China advertisement said buyers of houses in another development could make down payments in garlic at 5 yuan per catty.
The advertisement said that the garlic promotion attracted 852 visits and 30 transactions involving 860,000 catties of garlic during the 16 days it was available. The wholesale market price for both garlic and wheat is 1.5 yuan per 500 grams.
Property developers are scrambling to boost sales after a nosedive in transactions from January to May, as China’s strict COVID-19 curbs combined with worries about a more profound property correction cloud Beijing’s 2022 economic growth target of 5.5%.
The move reflects how far some developers are willing to go to attract wary homebuyers as the economy slows and the industry endures a crippling cash crunch. Central China, the country’s 37th-largest builder, recently sought state support when its parent company agreed to sell a stake to the provincial government.
Its perk to farmers appears aggressive. Central China was offering to buy wheat at 4 yuan a kilogram, higher than the record 3-3.1 yuan that China’s state stockpiling company was purchasing the grain for earlier this month.
Henan is China’s largest wheat-producing area. The country just had another bumper harvest of winter-sown wheat.
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.
Property agents said buyer sentiment is starting to improve, but it was too early to call a turning point because of China’s many economic uncertainties.
“Some developments are selling quite well. Those are the ones offering price cuts or promotions,” said Andy Lee, chief executive officer at realtor Centaline China.
