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Evergrande leads in cutting property prices

By Nie Peng (chinadaily.com.cn)
Updated: 2010-05-06 12:21

Chinese developer Evergrande Real Estate Group on Thursday started to offer a 15 percent discount on prices of its 40 property projects across the country to promote sales amid government tightening measures to cool down the red-hot sector, Shanghai Securities News reported.

Analysts told the paper that Evergrande might become the first domino that triggers a nationwide decline in property prices.

According to the paper, a survey conducted during the May Day holiday found no apparent signs of a price drop at more than 100 property developments by China's ten major real estate companies.

However, an industry insider said Evergrande's move to cut prices will have certain implications on property price trends in at least the 20 cities -- including Tianjin near Beijing, south China's Guangzhou, southwest China's Chongqing and Chengdu, central China's Wuhan, east China's Nanjing, and northeast China's Shenyang -- where the company has projects on sale.

By cutting prices, Evergrande aims to grab more market share in a short period of time against the backdrop of the government's efforts to damp property prices, a source close to Evergrande told the paper.

The company also wants to accumulate capital for potential mergers and acquisitions in the new round of industry reshuffle resulting from cooling measures such as credit tightening, the source said.

China's real estate kept a good record in sales in April, but remained hungry for cash, the report said.

Evergrande said on April 2 that its sales jumped 175 percent in the first quarter over the same period of last year to 8.53 billion yuan ($1.25 billion).

Later last month, Evergrande said it raised $600 million by reopening dollar-denominated bonds, which bear an annual coupon of 13 percent and are due in 2015, to fund its existing and new property projects.