Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Even in tech hub Shenzhen, China's property market succumbs to chills

Stock MarketsNov 29, 2021 00:36
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. Under-construction apartments are pictured from a building during sunset in the Shekou area of Shenzhen, Guangdong province, China November 7, 2021. REUTERS/David Kirton 2/2

By David Kirton

SHENZHEN, China (Reuters) - 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 ($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 (HK:0700) 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 0.2% 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."

($1 = 6.3836 Chinese yuan)

Even in tech hub Shenzhen, China's property market succumbs to chills
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email