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China's No. 3 Developer Starts Selling Homes Cheap. What Gives?

By Bloomberg News

/ Bloomberg |

February 12, 2018 11:53 AM SGT

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Billionaire Hui Ka Yan’s China Evergrande Group, the nation’s number three by sales last year, has started selling homes cheap.

A 12 percent discount will apply to many apartments ahead of a week-long Chinese New Year holiday, the firm said late last week. Sweeteners include down-payments by installment.

The company may see headwinds for the property market amid local governments’ stringent home-buying curbs and the potential for liquidity to tighten. One analyst’s theory: this is a bid to please a government determined to cool housing prices, ahead of a long-standing plan to list a property unit on the mainland.

“It is likely that they are seeking political advantage to speed up their A-share backdoor listing,” said Raymond Cheng, director of Hong Kong and China property research at CIMB Securities Ltd.

For its part, Evergrande said the promotion was for the holiday season, when sales are slower.

As a footnote, one of the social media posts advertising the offers said: “Stock investments are not reliable, buying property proves better!”

Falling stocks are something that Evergrande knows about: its shares have tumbled 21 percent in Hong Kong this year after a meteoric rise in 2017.

— With assistance by Emma Dong, and Moxy Ying

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