Exposing the Method Behind the "50% Discount" on New Properties in Zhuhai? Ministry of Housing and Urban-Rural Development Responds

 On the 22nd, a news item claiming "A real estate company in Zhuhai launches the first shot of '50% off' property sales – a well-known project in Jinwan District has a registered price of 28,000 RMB/sqm, and the developer is selling it for 14,000-15,000 RMB/sqm" gained widespread attention on social media.

First Financial News learned from multiple sources that the mentioned project refers to "Jinwan·Baolong City," located in the Jinwan District of Zhuhai's Aviation New Town. This project is jointly developed by listed property companies Baolong Real Estate and Yageo Property. It mainly targets first-time homebuyers, with unit sizes ranging from approximately 68 to 110 square meters. In 2020, the project obtained its presale permit, and some of the units are expected to be delivered by June of next year.

"(The developer) recently adjusted the registered price. The initial registered price was around 24,000 to 28,000 RMB/sqm, and the actual average selling price was around 25,000 to 26,000 RMB/sqm. According to the latest property registration rules in Zhuhai, the actual selling price cannot be lower than 85% of the registered price. Currently, after the project's registered price was lowered and then discounted by 15%, the actual selling price dropped to around 15,000 RMB/sqm. For buyers, purchasing now is equivalent to earning a net profit of 10,000 RMB per square meter," a real estate agent from Lianjia told a reporter on the evening of the 22nd.

According to the latest public information on the official website of the Zhuhai Housing and Urban-Rural Development Bureau, on July 26th, a total of 196 units in the D area of Jinwan Baolong Plaza had their prices adjusted, with the registered average price being 18,967.07 RMB/sqm. Three months ago, on April 3rd, the registered prices for 214 units in the D area were lowered, with the initial registered average price of 26,889.95 RMB/sqm being adjusted to 20,804.33 RMB/sqm.

It's worth noting that some of the units had their registered prices lowered twice this year. For instance, a unit in Building 1, Room 1201 of the D area of Jinwan Baolong Plaza, with a total area of about 69 square meters, had an initial registered price of 28,002.57 RMB/sqm in 2021. This was reduced to 21,745.32 RMB/sqm in April this year, and further lowered to 19,783.96 RMB/sqm at the end of July. This constitutes a reduction of approximately 30% in the registered price alone.

On the morning of the 23rd, a reporter from First Financial contacted the Zhuhai Jinwan District Housing and Urban-Rural Development Bureau. An employee responsible for the real estate transaction section said that the price reduction strategy adopted by the Baolong City project was a reasonable market behavior. In Zhuhai, local real estate developers can apply to the Zhuhai Housing and Urban-Rural Development Bureau to adjust the registered price of new properties once per quarter. After the adjustment, as long as the selling price is not lower than 85% of the registered price, normal online signing procedures can be carried out.

In 2016, Zhuhai issued a notice requiring that newly built residential properties must undergo price registration before being sold (presales and existing property sales), and that the "one unit, one price" principle must be strictly followed starting from October 6 of that year. In April 2022, Zhuhai adjusted its property price registration rules, changing the requirement for actual selling prices from no less than 90% of the registered price to 85%. The interval for adjusting registered average prices was set to at least three months.

"For instance, some people may have bought a property for over 20,000 RMB per square meter a few years ago. With the improvement in the market later on, the registered price for this property could rise to 30,000 RMB. The developer cannot ask these homeowners to make up the difference of 10,000 RMB," the employee further explained. He indicated that in Zhuhai, there are limitations on the proportion of quarterly increases in the registered price of new residential properties, but no such limitations for reductions. In recent times, some developers may be facing financial constraints and hope to accelerate fund recovery or activate other property projects in the region by lowering prices. As long as they comply with the current registration rules and pass the audit of the local housing department, it is considered a legitimate practice.

First Financial's review found that since last year, numerous newly-built property projects in Zhuhai have significantly lowered their registered prices. This phenomenon is particularly noticeable in non-central areas like Jinwan and Doumen.

For instance, the Gemini Tower, located in Doumen District, offers properties with a built-up area of about 90 square meters, mainly targeting first-time homebuyers. Developed by Zhuhai Gree Real Estate, the registered average price for units in Buildings 1 and 2 was reduced from 18,002.01 RMB/sqm in 2019 to 10,795.56 RMB/sqm in 2023, representing a decrease of around 40%. In addition, it was further discounted by 15% to about 9,200 RMB/sqm based on the registered price.

The prices of improvement-type properties are relatively more resilient, but some popular projects also experienced reductions in registered prices. For example, the Yunsu Guantang Garden project developed by Sunac in Jinwan District lowered the registered average price for Building A3 from 27,066.53 RMB/sqm in October 2022 to 25,959.62 RMB/sqm on August 2 this year.

The large-scale reduction in registered property prices in Zhuhai's Jinwan and Doumen areas is closely related to the large inventory of new properties and the difficulty in clearing them.

According to related research reports from S-En, Zhuhai's property market saw a certain degree of decline in transaction volume year-on-year for each month of 2022 compared to the same months in 2021. Transaction prices also showed a slight downward trend, and the overall market was relatively sluggish. The pace of project launches and additional releases also slowed down, and the overall market trended downward. In central urban areas where housing resources are scarce and no new projects are being introduced, some property projects saw an increase in transaction prices. However, in areas like Doumen and Jinwan's Aviation New Town, where there are many properties for sale, projects are similar, and supporting facilities are yet to be improved, the focus was on inventory clearance throughout the year, and prices continued to decline.

Entering 2023, Zhuhai's lowest interest rate for first-home mortgages has dropped to 3.6%, and the property market transactions have picked up to some extent. However, due to the large inventory of new properties in non-central areas, developers are still in the phase of offering discounts to attract buyers. Taking the Baolong City project in Jinwan District as an example, based on a research report from S-En.