Shenzhen Nips Developer's Zero Down Payments for Homes in the Bud
Zhang Huimin
DATE:  Aug 12 2022
/ SOURCE:  Yicai
Shenzhen Nips Developer's Zero Down Payments for Homes in the Bud Shenzhen Nips Developer's Zero Down Payments for Homes in the Bud

(Yicai Global) Aug. 12 -- The unusual marketing strategy of zero-cost down payments for properties developed by Shenrunchuan Industry in Shenzhen has been stopped in its tracks by regulators.

Authorities have suspended Shenrunchuan's promotion of down payment-free properties in the Xincheng Jinyuecheng project in Shenzhen’s Longgang district in less than a day, insiders said to Yicai Global.

Shenrunchuan had launched the campaign yesterday to offer zero-interest loans of CNY1 million (USD148,476) issued by a bank for home buyers. The five-year loans could be used to cover down payments or other purchasing expenditures. A salesperson confirmed the authenticity of the campaign to Yicai Global.

Three residential buildings of Xincheng Jinyuecheng secured their presales licenses on July 21, according to public information. The average selling price is CNY39,400 (USD5,850) per square meter. A single apartment unit costs from CNY2.83 million to CNY4.85 million (up to USD719,382). 

The campaign violated some regulations related to sufficient down payments and pieces of evidence have been handed over to financial regulatory authorities for further investigation, said an official at the district's office for regulating property presales.

The offering broke some rules, Zheng Bo’en, a lawyer at Zhongju Law Firm, said to Yicai Global. The expected punishments may be fines or frozen assets, Zheng added.

This is not the first such incident. In some second and third-tier cities, similar campaigns have popped up since the second half of last year. But the appearance in a first-tier city such as Shenzhen proves the market is facing serious de-stocking pressures. 

The above-mentioned salesperson said that the major reason for the latest campaign is the developer's urgent need to sell more properties to secure funds.

The move mainly aims to lure home buyers, said Li Yujia, chief researcher at the housing policy research center of the Guangdong Urban & Rural Planning and Design Institute. It shows that Shenzhen’s property market has very weak both in purchasing capacity and in market expectations, Li added.

In the first half, Shenzhen’s transaction volume of properties was lower than in more than 15 years, according to data from the Leyoujia Research Center. The number of new home contracts penned online fell 40 percent to nearly 16,130 from a year ago. The volume of sold secondhand homes slumped 65 percent to almost 9,970.

The cycle of commercial housing sales almost doubled in Shenzhen over the past year, reaching 10.3 months as of June 30, as sales slowed.

Editor: Tang Shihua, Emmi Laine 

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Keywords:   Sale Promotion,Zero Down Payment,Apartment Unit,Property Developer,Financial Regulator,Supply and Demand,Industry Analysis,Shenzhen