Amid a cooling real estate sector, some real estate agents in small Chinese cities are offering potential buyers the option of making down payments on housing using their agricultural products.
Central China Group, a Henan-based real estate conglomerate, is allowing prospective home buyers in Shangqiu to redeem wheat for up to 160,000 yuan ($23,800) as a down payment for purchases made between June 20 and July 10 , Red Star News reported Wednesday. The company claims to have real estate assets in 18 cities across the province.
Such a swap would offer a chance to cover down payments for units between 117 and 144 square meters, which online marketplace Anjuke said would have a down payment between around 130,000 yuan and 170,000 yuan. Buyers are expected to sell their agricultural products to designated wholesalers at a price of 4 yuan per kilogram, about 1.5 times higher than the average market price.
A Central China sales hotline employee confirmed the promotional offer to Sixth Tone but declined to comment on the response they have received since the launch.
Bo Wenxi, chief economist at Interpublic Group China, Told national media that the marketing attempt was intended to create a desire in potential rural customers to make a purchase. He added that it was also an indirect method to bring down property prices.
The marketing gimmick in Shangqiu comes as Henan experiences a real estate malaise caused by the pandemic and natural disasters in the province. Overall commercial property sales in the first five months of 2022 tear down of 20.5% per year, with a 22.8% decline in residential units, according to the provincial statistics office.
The contraction in one of China’s agricultural hubs is not isolated, however. Demand for real estate purchases has slowed since the second half of 2021 after the government repression lending money to indebted developers triggered a liquidity crisis.
Subdued buyer sentiment has triggered an excessive housing backlog among property developers in small and medium cities, which share a higher inventory ratio and take longer for clearance, according to a report by the China Index Academy, a research real estate based in Beijing. institute.
And property developers are looking for ways to attract potential customers.
Prior to Shangqiu, Central China also allowed guests in Kaifeng, another city in Henan, to make lodging deposits with garlic, a major agricultural product in the region. The company claimed to have sold 30 units in 16 days, earning more than 430,000 kilograms of garlic in return, according to Red Star News.
Central China’s willingness to accept agricultural products on installments comes nearly a year after wrote to the provincial government about its financial difficulties. The company said later he was able to pay his debts on his own.
Yan Yuejin, research director in an industrial think tank, Told national media that the lack of attractiveness of small towns makes it difficult to amortize the risk with the support of external demands.
“Sales have fallen almost 50% in these small towns in the first half of the year and innovation in the marketing model is imperative,” he said.
The wheat marketing campaign against ownership has generated wide debate among experts and the public. While some praised the innovative idea, others questioned its effectiveness and warned of financial risks.
“Farmers tend to have less ability to take property risks,” said one comment in the Southern Metropolis Daily said. “They can use the wheat or the garlic to meet the down payment, but they can’t use it to pay the remaining debts.”
Publisher: Bibek Bhandari.
(Header image: VCG)