Free BMWs, huge discounts show China developers desperate to sell

SHANGHAI • Chinese property developers are offering free luxury cars and hefty discounts to lure buyers as lending curbs and funding constraints squeeze their nances.

China Merchants Shekou Industrial Zone Holdings Co is giving away a BMW Series 3 or X1 to buyers of a three-bedroom unit or townhouse at its Shanghai development. The car, or cash equivalent, equates to about a 10% discount on the 3.1 million yuan (RM1.87 million) price of the 89 sq m apartment.

At China Evergrande Group’s 646 nationwide projects, a basic 11% price cut widens to as much as 26% once extra perks, such as discounts to buyers referred by Evergrande employees or previous buyers, are thrown in.

A further incentive: An initial downpayment of just 5% is required, compared to the usual 30% deposit required by local governments.

The giveaways and discounts suggest debt-laden developers are pulling out all stops to raise revenue, with the sector facing a record US$23 billion (RM95.34 billion) maturity wall in the first quarter of 2019. China’s determination to keep a lid on home prices has made it harder for developers to generate swift cash from sales.

“Financing is becoming hard for everyone, even including the giant players,” said Sabrina Wei, head of northern China research at Cushman & Wakefield Inc. “They need discounts to boost sales and collect cash.”

“Property projects are no longer an easy sale. We may soon see this prolonged upbeat property season behind us.” — Bloomberg