Buy a House Online During the Epidemic? So Far, No Takers
The China Real Estate Association asked members Jan. 26 to suspend business at their sales offices nationwide to prevent human-to-human transmission of the virus. As of Thursday, the disease sickened nearly 60,000 people and killed more than 1,300 in China.
In the following days, online real estate search platforms including Zhugefang and Fang.com created special sections for developers to sell condos online. Some developers including Longfor Properties Co. and Sunac China Holdings Ltd. launched their own online sales offices via social media giant WeChat. Some developers also promote projects through live streaming on video-sharing social networking platforms such as Douyin and Huya.
Potential buyers can take virtual tours of housing, talk with sales staff, book on-site viewings and even sign purchase agreements and pay deposits online. But none of this has led to any actual sales, according to sales staff from several developers. The only deal reached since the closure of sales offices involved an existing client, and no deals were reached online, a developer at Zhengzhou told Caixin.
During the first seven days this month, new homes sales in 66 cities declined 98%, data from Huatai Securities showed.
Real estate transactions still rely on on-site viewings, and online showings can play only a limited role in attracting potential buyers for the future, a leading developer said. Online showings may help buyers who shop condos for investment purposes, but those who seek housing for personal use would still prefer on-site viewings, the developer said.
To encourage purchases, some developers offer cancellations without cause. Sunac recently said buyers in certain projects can cancel transactions made from Feb. 9 to March 31 for no reason within 30 days after purchase. Other developers including Sinic Holdings, Country Garden and Sunshine City Group Co. followed suit.
All these efforts might have little effect before the epidemic ends and sales offices reopen, said Yan Yuejin, research director of think tank Shanghai Yiju Real Estate Institute.
If the epidemic is contained by the end of this month, the impact on the real estate industry will be limited as the virus outbreak has delayed market demand rather than eliminated it, GF Securities said in a report released Feb. 9.
But for developers, cash-flow problems are becoming more troublesome. Most of them already faced liquidity pressures after regulators tightened the financing environment in the past few years. Deposits and mortgage loans account for about half of developers’ funds. Now, as regulators slow the financing approval process, the debt issuance of developers has also significantly contracted.
CRIC data showed that just four real estate companies issued offshore debt from Jan. 25 to Feb. 10, down 86% from the same period last year.
Meanwhile, many developers will face a peak of debt maturity in the second half of this year with a total of 120 billion yuan ($17.2 billion) of debt due, CRIC data shows. Assuming a 50% decline in operating cash flow, most developers’ current cash can last only about three months, Ping An Securities estimated.
In response to the central government’s call to maintain economic stability, many local governments have introduced measures to help property companies. The Guangdong and Chengdu governments Wednesday allowed developers to reopen sales offices with conditions, including limiting the number of visitors.
Governments in Xi’an, Wuxi and Shanghai also introduced supportive policies, including lowering the land sale deposit ratio, extending credit and providing affordable housing loans.
Contact reporter Denise Jia (email@example.com) and editor Bob Simison (firstname.lastname@example.org)
Wang Jing and Zhao Tiantian contributed to this report.
- MOST POPULAR