Life of Guangzhou - Guangdong Property Prices, Demand Drop

GUANGZHOU: Despite property prices falling, a lack of demand in the Pearl River Delta region has property owners such as Zhang Weiqiang struggling to make a living.

Since January, Zhang has sold just three pieces of property. That's a surprising number, he said, considering that prices aren't nearly as high as they were in the fourth quarter of 2007.

"There are fewer buyers, compared with last year, even though we have reduced prices," said Zhang, a Guangzhou property sales manager who asked that his company not be identified. "New apartments are just not in bulk sale now and the price has seen a big drop since January."

How big of a drop? Well, official statistics from the Guangzhou Land Resources and Property Management Bureau said that the average price of new residential apartments in the city has dropped by 15.6 percent since October - from a record-high average of 11,574 yuan per sq m to just 9,766 yuan.

A survey released Tuesday by Southern Metropolis Daily indicated that among the 108 commercial buildings in the provincial capital city, 60 percent of them, or 65 total, have seen price drops of 10 to 50 percent.

Moreover, the prices are expected to continue falling throughout Guangdong province due to an oversupply, along with what market insiders say is a "wait-and-see" attitude being adopted by customers.

Wu Dingjin, a manager of Jingwei Real Estate Ltd, cited the oversupply that has carried over from last year. "And the price is expected to see a slight drop in the middle of this year," he said.

As of Thursday, Guangzhou had 31,346 apartments available for sale - an increase of 10 percent more than one year ago, according to figures on the Guangzhou Land Resources and Property Management website.

"The oversupply will, by all means, push developers to reduce their prices in order to attract buyers," Wu said.

A property agent waits for home buyers to check out a new housing development project. AFP

Han Shitong, general manager of Hantong Investment and Consultancy Ltd, also noted that fewer property-sale agreements will contribute to the prices dropping throughout Guangzhou.

"The price in last two years has been too high for locals to afford," Han said. "They have to wait and see."

In the past two weeks, three major developers have listed more than 1,000 apartments for sale in downtown Dongguan, one of the the leading manufacturing cities in South China. They are priced as long as about 4,000 yuan per sq m.

"The prices (in Dongguan) have plunged by about 30 percent compared with last July when they reached record highs here. The drop will be very influential on the local property market this year," said Chai Yuan, a manager of the Dongguan Branch of the World Union Real Estate Consultancy Ltd.

Besides the general oversupply, Chai also attributed the price plunge to the industry being restructured. It has resulted in Taiwan- and Hong Kong-based investors pulling out of the mainland market.

Once major buyers of residential homes in Dongguan, those Taiwan and Hong Kong investors have cited the market transformation as reasons for hasty withdrawals. "As a result, market demand is shrinking" in Dongguan, Chai said.

"Last but not least, price drops in the neighboring cities of Guangzhou and Shenzhen have dampened local developers' confidence and consolidated potential buyers' wait-and-see stance," Chai said. (By Qiu Quanlin)

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