By Ma Hongman (China Daily)
Updated: 2008-01-22 10:44

Chuanghui Estate Broker Company, the Shenzhen-based real estate company that leads the country in terms of branch offices, closed branches in seven cities in the Pearl River Delta area early this month.

This is only one of a series signs suggesting the city is starting to get the chills from its sluggish real estate market. Real estate developers in Shenzhen are offering all kinds of incentives to attract customers, ranging from price discounts to waivers for property management fees. But these incentives do not seem to be inspiring many deals.

Wang Shi, chairman of the Vanke Group, the country's top property developer, even spoke out during a CCTV program, urging potential buyers not to buy houses in the next three to four years because the market was nearing a turning point.

It is a law of the market that the price of a commodity cannot keep going up forever. The price of property in Shenzhen has just proven the validity of this law.

In the first six months of last year, the price of property in Shenzhen climbed at a rate of more than 10 percent every month. It eventually became impossible to buy an apartment for less than 18,000 yuan ($2,400) per square meter in the city.

Shenzhen, the first city in China assigned to embrace the policy of opening up its economy in the late 1970s, has been in the national spotlight because of the dramatic upward momentum of prices in its real estate market.

However, prices in Shenzhen were also the first to drop after the authorities launched special policies aimed at reining in real estate fever.

The number of real estate deals shrank quickly starting in July last year, declining along a steep curve. The current price is at about the same level as it was in late 2006, 40 percent off from its peak.

Therefore, it is little wonder that real estate brokers and developers find themselves stuck in deep mud even as common people applaud the gradual return to price sanity.

As it happens, Chuanghui is not the only real estate brokerage scratching its head over irregular cash flows. Several other agencies have also closed down branches in major cities since December.

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