Even in tech hub Shenzhen, China's property market succumbs to chills
SHENZHEN, China : Life used to be good for Jerry Tang, who
left his rural hometown in 2014 to become a real estate agent in Shenzhen -
China's tech megacity and one of the world's hottest property markets.
Just a few years ago Tang could make up to 50,000 yuan
(US$7,800) in a good month selling apartments. Last year, he was making around
15,000 yuan a month, but this year that's fallen to about 5,000 yuan and mostly
comes from commission on rentals.
"It's definitely much harder to sell this year,"
he said. "Buyers are waiting to see what happens with the market, while
developers are cash-strapped, they are taking time to pay commission to
agents."
In Shenzhen - home to 17.6 million people and firms like
gaming powerhouse Tencent Holdings Ltd and telecommunications giant Huawei
Technologies - some smaller realtor offices have closed. Eight real estate
agents Reuters spoke with also say at least a third of their colleagues have
either left the industry or are thinking about it.
Lianjia, a major realtor, plans to shut down a fifth, or
about a hundred, of its offices in Shenzhen, financial news service Caixin
reported in September, citing an internal memo. Lianjia and its parent company
KE Holdings did not respond to requests for comment.
The lack of turnover in Shenzhen's property market and the
fallout on the city's real estate brokers stems in part from deliberate policy
efforts over the past year by local authorities to make apartment prices more
affordable, including requiring higher down payments for second homes and
capping resale prices.
But real estate agents say it also due to the current crisis
of confidence hitting China's property industry, highlighting just how
extensively the sector's woes are reverberating. If Shenzhen - emblematic of
China's meteoric economic rise over the past 40 years - is not immune, then few
places in the country are.
China's property market, which accounts for a quarter of GDP
by some metrics, has been suffering unprecedented stress after policymakers this
year introduced debt caps to rein in excessive borrowing by developers.
That in turn has helped lead to liquidity crises at
developers such as China Evergrande Group, the world's most indebted developer,
and Kaisa Group Holdings. Both of them also happen to be headquartered in
Shenzhen. Policymakers are, however, widely expected to stand firm on the new
rules which are perceived as necessary reform.
Prices for new homes in Shenzhen fell 0.2per cent in October from a month earlier - their first drop this year - and in line with the national average. It remains to be seen, however, if Shenzhen's property prices will suffer the more sustained, albeit still small declines that have hit some second-tier Chinese cities this year.
In its favour, the southern tech hub's economy is not much
smaller than that of fellow megacity Shanghai's but Shenzhen has only a third
of the land, ensuring strong underlying demand for apartments.
"Buyers are concerned about Evergrande and contagion,
but in Shenzhen they know other developers would step in to finish projects if
they had to," Tang said.
For some, the tougher curbs and subsequent property market
chills are a sign that speculative buying - often rampant in China as
traditionally there have been few other investment options - could become a
thing of the past.
"My parents' generation could close their eyes and
point somewhere to invest their money and get a great return - they could
gamble," said Lisa Li, who works in the investment industry and recently
bought a small studio apartment but found the process nerve-wracking.
"Our generation can't do that, we'd be in
trouble," she said.
That's cold comfort, however, for Tang, 30, who says he is
thinking of changing jobs.
"I need savings if I'm to find a girlfriend, and I'm
supporting my mum back home."
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