China's largest real estate developer Vanke has embarked on a series of promotional activities in Shenzhen and Shanghai to attract prospective home buyers.
Analysts said the promotional activities are de facto price cuts by Vanke as part of its efforts to cope with the gloomy domestic property market.
From Jan 28 to Feb 9, Vanke conducted a series of activities in Shanghai, including lucky draws with the top prize a 13,000 yuan discount on new home buys, one year free car parking, free property management, and free cable TV service. A similar sale last year helped Vanke rake in 257 million yuan cash in a single day.
Between Feb 7 and 9, as a promotional campaign during the Lantern Festival, Vanke offered 10,000 yuan cash rewards for prospective home buyers in Shenzhen.
Figures from Vanke showed that sales revenues in January increased 18.6 percent year-on-year, and experts said it was tightly linked to its consistent promotion plans.
According to Vanke's report released on Sunday, apartments traded in January on average were priced at 7,657.44 yuan per sq m, a 5.2 percent fall from December.
Following Vanke's steps, a group of property developers in Shanghai including Greenland Group, Hong Kong-listed Hopson Development, and Poly Real Estate Group, have all marketed their projects with favorable offers during the Lantern Festival.
Industry experts pointed out that the projects that are offering incentives are those which have been developed earlier and not the new ones.
"We could see more property developers embarking on similar activities after March. Developers and potential home buyers are expecting more favorable polices to be announced then and are adopting a wait-and-see attitude for now," said Chen Zhencheng, an industry analyst.
According to statistics from Uwin, a real estate information provider, Shanghai's residential units traded at an average price of 13,700 yuan per sq m in 2008, up 32.52 percent over 2007. Around 8.97 million sq m of housing area was traded in Shanghai last year, down 56.9 percent over 2007.
Industry experts predicted that developers would cut prices to counter the financial crisis as the government stimulus measures alone are not enough to lift the gloom in the residential market.
"Housing prices in most of the big cities could drop by over 15 percent this year," said Chen Xikang, a researcher with the Chinese Academy of Sciences, the government thinktank.
"Across the country, housing prices may drop by 8-10 percent on average in 2009, while the price in some big cities may go down by 15-20 percent," said Chen.