Shenzhen homeowners seize building collapse opportunity to make a quick profit, raise prices by 20 per cent

By Pearl Liu pearl.liu@scmp.com / https://www.scmp.com/business/article/3024946/shenzhen-homeowners-seize-building-collapse-opportunity-make-quick-profit?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | September 11, 2019 11:57 AM SGT
One would expect a building collapse to be disastrous for home prices. But in Shenzhen prices have zoomed up instead.
Homeowners in a residential estate in the southern Chinese city where a building collapsed on Wednesday morning raised their prices by nearly 20 per cent within 24 hours of the incident, betting buyers would be willing to pay a premium in the hope that the entire estate would be razed and redeveloped.
A block of flats in the Heping Xinqu residential estate in Louhu district sank into the ground on August 28, 2019, and leaned to one side. Luckily no casualties were reported.
The 29-year-old residential scheme has more than 100 homes.
A broker said that a homeowner, who had put his flat on the market for 3.1 million yuan (US$433,300) two months ago, quickly raised the asking price by 600,000 yuan to 3.7 million yuan.
"The flats are suddenly in demand as buyers expect the authorities to provide homeowners with new flats, which will be worth much more, after they demolish other buildings and redevelop the site," said Fion He, chief analyst at brokerage Midland Realty.
But she warned that the uncertainty over the redevelopment was quite high as there was no guarantee the Shenzhen government could make it a part of its urban redevelopment plan.
Unlike other major mainland cities, Shenzhen does not have a large land bank and urban redevelopment " demolishing old low-density buildings and building more flats " is widely seen as the answer to the city's growing population and further development.
Data from Midland Realty showed that sellers of three out of six flats in Heping Xinqu had withdrawn their offers and the brokerage said the others were not answering calls to see if they were still interested in selling.
Meanwhile, ads for flats in the same project on other online listing platforms highlighted that the entire estate will soon be torn down as part of the city's urban redevelopment plan.
An aerial view of the residential estate in Shenzhen's Luohu district where a building collapsed on Wednesday. Photo:Weibo alt=An aerial view of the residential estate in Shenzhen's Luohu district where a building collapsed on Wednesday. Photo:Weibo