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Saturday 29 November 2008
Chinese Developers Urged to Publicise True Costs
A senior mainland housing official yesterday urged the country’s cash-strapped developers to publicise their true profit margins in a bid to convince people the market has hit bottom.
A senior mainland housing official yesterday urged the country’s cash-strapped developers to publicise their true profit margins in a bid to convince people the market has hit bottom.
Developers’ margins are reportedly being squeezed to almost zero after widespread price reductions over the past few months, while publicising the figures could convince potential homebuyers to go bargain hunting.
The remarks by Qi Ji, a deputy minister of housing and urban-rural development, came after a few smaller developers in Shenzhen and Wuhan, where home prices have dived this year, made public the construction and land costs of their projects in a bid to attract potential buyers.
“I suggest that developers, especially in some provincial capitals, should open their books to press home the message that prices have already hit the floor,” said Mr. Qi. “That would hopefully change some people’s minds, persuading them to buy instead of waiting.”
Average home prices in 70 major mainland cities have dropped 0.1 per cent in the three months to September compared with the previous quarter, according to a survey by the government-backed All China Federation of Industry and Commerce earlier this week.
It was the first negative number in five years and came at the end of 11 consecutive months of declines in transactions.
Betting on a further downturn in the current economic conditions, many potential homebuyers have put on hold or cancelled purchases despite deep discounts being offered by developers.
A group of smaller developers first opened their books in September, while Shenzhen’s Hetianju Property followed suit earlier this week, revealing the price at which it acquired land in the city’s Longgang district and the cost of building a medium-sized residential compound on it.
The company said it made a profit of 300 yuan (HK$340.53) per square metre, or a 7.5 per cent premium on the project’s overall cost.
But Ren Zhiqiang, the chief executive of state-owned Beijing Huayuan Property, reportedly dismissed the Shenzhen and Wuhan developers’ moves as “antics”.
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Developers Urged to Publicise True Costs
Martin Zhou
29 November 2008
A senior mainland housing official yesterday urged the country’s cash-strapped developers to publicise their true profit margins in a bid to convince people the market has hit bottom.
Developers’ margins are reportedly being squeezed to almost zero after widespread price reductions over the past few months, while publicising the figures could convince potential homebuyers to go bargain hunting.
The remarks by Qi Ji, a deputy minister of housing and urban-rural development, came after a few smaller developers in Shenzhen and Wuhan, where home prices have dived this year, made public the construction and land costs of their projects in a bid to attract potential buyers.
“I suggest that developers, especially in some provincial capitals, should open their books to press home the message that prices have already hit the floor,” said Mr. Qi. “That would hopefully change some people’s minds, persuading them to buy instead of waiting.”
Average home prices in 70 major mainland cities have dropped 0.1 per cent in the three months to September compared with the previous quarter, according to a survey by the government-backed All China Federation of Industry and Commerce earlier this week.
It was the first negative number in five years and came at the end of 11 consecutive months of declines in transactions.
Betting on a further downturn in the current economic conditions, many potential homebuyers have put on hold or cancelled purchases despite deep discounts being offered by developers.
A group of smaller developers first opened their books in September, while Shenzhen’s Hetianju Property followed suit earlier this week, revealing the price at which it acquired land in the city’s Longgang district and the cost of building a medium-sized residential compound on it.
The company said it made a profit of 300 yuan (HK$340.53) per square metre, or a 7.5 per cent premium on the project’s overall cost.
But Ren Zhiqiang, the chief executive of state-owned Beijing Huayuan Property, reportedly dismissed the Shenzhen and Wuhan developers’ moves as “antics”.
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