China Vanke Co Ltd, the country's largest publicly listed real estate developer, is planning to launch big sales promotions in Shanghai on Thursday, the company said.
The Shenzhen-based company, China's biggest residential property developer, will offer discounts of as much as five percent to local home buyers on Thursday, the Lantern Festival, following similar promotions in other Chinese cities, including Guangzhou and Shenzhen.
Buyers who sign home purchase agreements with the company on that day can gain the largest discounts Vanke has offered in Shanghai since 2007, industry people said.
About 10 Vanke projects on sale - including residential and commercial properties - will be open for the promotions, the company said.
The company said it would likely offer the discounts annually in the future to reward clients, according to media reports.
Vanke is among the first developers to launch sales offers after China's real-estate market cooled in response to the central government tightening lending.
For example, in January, a Vanke residential project in Chengdu, Sichuan Province, was sold at between 4,500 yuan (US$626) and 4,600 yuan per square meter, much lower than the asking price of more than 6,000 yuan two months earlier in the same area.
Wang Shi, chairman of Vanke, said that price cuts were the company's response to a changing market.
As the country's leading residential property developer, Vanke's price cuts may trigger similar approaches by other developers, industry analysts said. "It is often the case that price cut promotions launched by one developer, especially big companies, in one area will probably be followed by its counterparts due to intensive competition among real estate companies," said Fan Weiguo, deputy general manager with Shanghai Hanyu Property Agency Ltd. "That is the so-called chain reaction scenario frequently seen in the real estate industry."
In Guangzhou, for instance, China Merchants Property Development Co and Gemdale Group, two major real estate developers in the country, have already launched similar promotions following Vanke.
Statistics show that sales of new homes dropped for the fourth consecutive month in January in Shanghai as more buyers are taking a wait-and-see attitude after the government stepped in to tackle soaring home prices.
(Shanghai Daily February 18, 2008)