Property developers take steps to stay afloat
Sales shifted from offline to online as housing transactions across the nation become stagnant due to disease outbreak
Although it needs time to gauge the blow of the novel coronavirus epidemic to the housing market, major property developers have been taking active measures to maintain their business.
This included shifting sales from offline to online as industry analysts suggested the impact could be short-lived as long as the virus disease is controlled soon.
Sales of the top 100 property developers reached 577.13 billion yuan ($82.4 billion) in January, down 12.7 percent year-on-year, data collected by the China Real Estate Information Corp (CRIC) showed.
The Lunar New Year is conventionally a low season for property sales. Given the unexpected novel coronavirus pneumonia outbreak, housing transactions across the nation have become stagnant.
Data collected by EH Consulting in the nation's 40 major cities showed that 15.39 million square meters of residential space were traded in January, down 5.9 percent from a year ago and slumping by 33.9 percent over the previous month's level.
"In January, the trade volume of Beijing's new residential apartments was slashed 33 percent month-on-month and 37.26 percent from a year ago in terms of gross floor area. Prices edged down 2.84 percent from that of December," said Yan Yuejin, research director at the E-House China R&D Institute.
In the premier economic hub of Shanghai, transactions of home space in January fell 28.97 percent from the previous month, and were down 7.56 percent from the same month in 2019. The average trade price of newly built property declined 2.4 percent month-on-month, and 4.1 percent year-on-year.
As the disease spread, property developers felt the pinch further in February.
CRIC reported that the 88 cities it monitored saw transaction space during the week after the Lunar New Year (between Jan 31 and Feb 6) tumble 95 percent from the same period in 2019.
"Our research and analysis suggested that the top 100 property developers will see halved trading of home space in the month of the Lunar New Year from the previous month," said Zhang Jian, chief analyst with the big data research institute under the Shenzhen Fangdd Network Technology Co Ltd, the nation's largest online property trading service platform.
Major property developers decided to postpone the resumption of work time as trading was suspended in more than 60 Chinese cities, a report by the Economic Information Daily said.
The Chinese Real Estate Industry Association issued a call on Feb 6 to suspend brick-and-mortar sales to prevent human-to-human transmission of the virus, while suggesting online solutions as an alternative to assist home buyers.
Evergrande became the first to launch self-service online marketing for all its properties across the nation. Since Feb 13, consumers can check apartments via VR, pick their preferred flats and make the purchases online.
The developer looks to cushion its offline sales in this way since all of its 1,246 under-development projects won't resume construction until Feb 20 and its 1,040 sales pavilions will remain shuttered as well.
During an online sales press conference on Feb 16, the property giant announced that it sold 47,540 units of apartments with a combined value of 58 billion yuan in three days since launching online sales.
At least 151 real estate developers have also launched online marketing, including 143 that are providing an online sales pavilion, according to CRIC research.
"Considering the current market environment, online sales prove an advisable way to lower customer acquisition cost," said Shen Xiaoling, an analyst with Shanghai-based CRIC.
On Feb 16, a document signed by Evergrande Chairman Xu Jiayin which was widely circulated online showed the official vowing to offer a 25 percent discount for all property projects available for sale during the period between Feb 18 and Feb 29, and a further 22 percent discount in March.
"The move is an effort to attract home buyers' attention and promote online home sales given the backdrop of the ongoing epidemic. This may inspire more developers to follow suit," said Yan.
The climate for the whole market to do their business online though is not yet mature.
"This is an opportunity for property developers to introduce to all Chinese people the possibility of online property trading. This is something that definitely is trendy in the future but currently has a lot of room for improvement," Yan added.
The shock wave from the outbreak has also been felt in the secondary market. The 18 major Chinese cities saw trade volume in the pre-owned home market slump in January by 38 percent month-on-month and 27.3 percent year-on-year respectively, data from Ke Research Institute, a research organization under real estate brokerage platform Ke.com, showed.
"A lot of property agencies closed temporarily because of the novel coronavirus pneumonia, and the negative impact of the epidemic on the pre-owned home market will expand in major Chinese cities," Yang Kewei, an analyst with CRIC, wrote in a report.
Surveys conducted by the Fangdd big data research institute about property agents across the nation showed more than 60 percent of those polled hold a pessimistic view for the pre-owned market in February. More than 24 percent forecast the trade volume in February will be more than halved compared to the same period in 2019.
Taking the strength and scale of Chinese economy into consideration, industry analysts and business insiders agreed that once the epidemic is contained in an effective and timely manner, the home market will regain its vitality.
"We should bear in mind that the epidemic would not defy the fundamentals of the Chinese economy which is growing sustainably. The solid demand for home buying still exists," Xu Yongjun, chairman of China Merchants Shekou, was quoted as saying by ThePaper.cn.
A survey conducted by ifeng.com among 8,451 homebuyers in 325 Chinese cities showed most of them are optimistic about the real estate market, and 51.9 percent said they still plan to buy properties in 2020.
The disease has affected the income of 67.9 percent of those polled, and 64 percent of people interviewed said they will postpone their home purchase for between three months to more than a year. Some 60.6 percent think home prices will go down and 61.3 percent are hoping for looser property measures, the report added.
As the local government continues to abide by the central government's spirit of implementing property measures in accordance with their own market conditions that housing is for living in, not for speculation, Yan suggested March may be a good time for those in need of a property to live in.
"Property developers' promotions are likely to extend by then, along with supportive policy and lower credit costs for rigid homebuyers," he explained.