Chinese Property Buyers Get BMW Thrown In

The sudden downturn in China’s property market is bad news for many global companies, but luxury German carmakers stand to benefit, at least in one city.

In Wenzhou, where house prices have fallen sharply, a real estate developer said that from Wednesday it would throw in the keys to a BMW with each apartment at a new residential complex for the first 150 buyers.

The deal is a sign of the desperation felt by developers in China’s once-booming property market, which has been pounded by government measures aimed at heading off a bubble. The slowdown is a matter of international concern, with Chinese house construction driving demand for commodities and propping up growth in the sputtering global economy.

Chinese developers have been reluctant to cut prices as transactions have slowed this year, but some are finally capitulating after dreadful sales in October. Others, afraid of the stigma of slashing prices, are offering giveaways such as extra garden plots, Louis Vuitton handbags, cruise vacations and now cars.

“Whoever signs a contract and makes the downpayment will be able to drive away in a BMW,” said the sales assistant at Central Mansions, a cluster of brown towers with 868 apartments that have just come on to the Wenzhou market.

“No, it doesn’t mean that sales are bad. It’s just that we’re trying to attract customers,” she said.

Home to legions of entrepreneurs and speculators, Wenzhou’s economy soared when China was flush with cash. But it has been hit harder than most cities by the government’s shift to a much tighter monetary policy to control inflation, as well as the property clampdown.

Wenzhou’s housing sector is now the weakest in the country, with prices falling 1.4 per cent in September month on month. Its smaller firms have suffered from a lack of bank credit, triggering dozens of bankruptcies and prompting the government to take action to boost financing in the city.

But while Wenzhou is an extreme case of the stress in China’s property market, it is certainly not alone. Housing prices have started to fall nationwide, according to the China Real Estate Index System.

That has been tough to digest for many Chinese who had come to believe that house values could only rise. When several developers in Shanghai cut their asking prices last month, homeowners protested, ransacking showrooms and demanding refunds.

Fearing similar fallout, many developers are trying to entice buyers with special deals instead of discounts. The BMWs in Wenzhou cost Rmb300,000 locally, equivalent to about 10 per cent of the price for an apartment, the sales assistant said.

Xiayunli No. 8, a development in Beijing that has sent workers to leaflet cars at busy intersections, said there would be no discount and no car for buyers.

“But you’ll get a deal and it will be no problem for it to amount to the tens of thousands. It will be like giving you a car,” the receptionist said.