China developers cut prices by up to 10 per cent to spur sales amid slowdown as policymakers maintain market curbs

By Daniel Ren ren.wei@scmp.com / https://www.scmp.com/business/companies/article/3033966/china-developers-cut-prices-10-cent-spur-sales-amid-slowdown?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | October 29, 2019 12:24 PM SGT
China's property developers are pricing their new home projects at a discount to drum up sales amid market-cooling measures, seeking to boost cash as a sliding currency raises the cost on debt repayment.
Some builders are cutting as much as 10 per cent off their selling prices to boost cash flows, after latest official data showed the economy grew last quarter at the slowest pace since records began in March 1992.
The economic report was followed by data showing September new home prices (excluding state-subsidised housing) in 70 Chinese cities rose by the smallest since February.
Prospective customers look at a model of the Dalian Wanda Group's property project in Qingdao, China. Photo: Bloomberg alt=Prospective customers look at a model of the Dalian Wanda Group's property project in Qingdao, China. Photo: Bloomberg
Chinese developers, among the biggest indebted companies, are also eyeing the yuan performance. The local currency weakened past the psychological 7 per dollar level in August, inducing concerns that further depreciation may be in store amid a tense trade ties with the US.
Moody's Investors Service said foreign-currency debts accounted for a quarter of Chinese developers' total debt in September, up from 20 per cent at the end of June 2018.
There are some bright spots in the market that suggest the sector could enjoy some breathing room from policy squeeze and downbeat sentiment caused by the Sino-US trade war.
Contract sales by 20 mainland developers in September climbed 27 per cent on year, according to a report by CGS-CIMB Securities, beating expectations as developers slashed prices by 5 to 10 per cent to lure buyers. Strong sales momentum could be sustained through year end, it said in a report.
For example, China Vanke raked in 49.3 billion yuan (US$6.97 billion) in contract sales, up 14 per cent from a year ago. Cifi Holdings recorded a 30 per cent jump to 20 billion yuan.
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