(Yicai Global) Feb. 17 -- Leading Chinese property developer Evergrande Group is slashing home prices by as much as a quarter and is moving much of its business online to counter a serious slump in the real estate market amid the coronavirus epidemic.
Evergrande is offering 25 percent off all of its listed apartments and office blocks from Feb. 18 to 29 and discounts of 22 percent from March 1 to 31, the Shenzhen-based firm said. Buyers who sign online contracts now will be eligible for these discounts until May 10.
More than 100 Chinese property firms, including Vanke, Country Garden and Sunac China Holdings, are exploring online models to drum up sales, according to incomplete statistics.
Heavily leveraged Evergrande, which needs to ensure it has enough cash flow to pay off billions in debt, has signed 47,500 online letters of intent in the last three days to sell properties worth a total of CNY58 billion (USD8.3 billion).
The number of online contracts is expected to more than double in the next few days, said Vice President Liu Xuefei.
Letters of intent can be signed with a fully refundable down payment of just CNY5,000 (USD716). If the buyer fails to secure the property after the May 10 deadline, the down payment will be refunded, and should someone else beat the initial buyer to the property, Evergrande will give them a refund and pay CNY5,000 in compensation.
Shares of Evergrande [HKG:3333] rose almost 1.3 percent today to close at CNY19.12 (USD2.74) each, after earlier climbing as much as 2.4 percent. The benchmark Hang Seng Index gained 0.6 percent.
This is only a short-term marketing strategy, said Xie Yifeng, dean of China Urban Real Estate Research Institute. "The no-hassle house return policy aims more at promoting sales and quick fund collection and has nothing to do with product quality," he said.
The number of registered users on Evergrande's online sales app Hengfangtong has jumped by three million over the last few days to more than 10 million, Liu said. Of these, there are 140,000 Evergrande staff and 1.47 million house owners. The other 83 percent are full-time real estate agents and part-time salesmen and women, he said. These online sales agents have earned nearly CNY10 billion (USD1.43 billion) in commissions from Evergrande so far, Liu added.
Editor: Kim Taylor