Never far from the media’s headlines these past few years has been China’s property market and its falling off a cliff. However, much of it was predestined, thanks to a sure-to-fail systemic structure. And all the signs are it’s a real-estate situation about to get worse.
On the 6th floor of IFC in Nanjing’s Xinjiekou is to be found a today somewhat deserted, yet remarkable office. This is the Contract Service & Transaction Service Centre for Beike (贝壳), a transformative force in the Chinese real-estate sector, thanks to a technology-driven platform revolutionising how housing transactions are conducted in China.
Therein, buyers and sellers are kept segregated in two out of a total of 29 negotiation rooms, with the property agents shuttling back and forth to haggle terms, all watched over by the omnipresent surveillance cameras. Had the surrounding colour scheme been a bit more oppressive, it would have frankly been Orwellian.
Once upon a time, this place was heaving with buyers and sellers together with their agents, usually until 01:00 every night. Those were the good-old days when everyone made a lot of money. How times have changed.
But there are other factors to China’s collapsing property market. In something of a never ending circle, the price plummet has meant that many people have cut back on their spending in general, sparking paranoia and accelerating the decline.
The trend in fact began as long as 10-15 years ago, as this correspondent attempted to sell a property in Pukou District of Nanjing. With offers not in the ballpark of that expected, when neighbours got wind of the selling price, their displeasure was immediately made clear. My selling of the property was going to push down the value of their dwellings.
Then there is another of the major reasons for the collapse; the unusual situation in China whereby properties are priced solely on a square-metre basis, which varies by location; more expensive near to a good school, etc. But unlike in western countries whereby property owners invest heavily in decoration and innovative features in order to retain or push up value, in China there is no such incentive.
As such, the bulk of dwellings are usually left to deteriorate. Plaster and paint peeling off cracked walls, often the result of inadequate foundations leading to subsidence; plus leaking roofs and dirty stairwells littered with scrap and clutter, are commonplace.
The fact that, post 1949, buildings in China have tended to last for a far shorter time than their western equivalents, has obviously not helped. The office bought by this correspondent on Dongbao Lu in Nanjing’s Hexi area in 2012, was a decrepit mess by 2017; I personally one day fell a floor and a half in an elevator as it gave way, in part thanks to the property management’s, well, mismanagement.
It can therefore be argued that China’s property market is partly collapsing under its own weight of slumminess.
So yes, today, much has changed; the aforementioned agents told The Nanjinger that they are still up until 01:00 very often, only now a whole lot more effort is required to make a sale, with concessions made at every turn. More shuttling back and forth…
The situation is all the more concerning when, as a seller close to The Nanjinger explained she was this month in the process of selling a property for a little over ¥2.5 million which she had owned for 10 years.
With the buyer continuing to press for further discounts, the evening and sale closed out hours later with the seller’s concession for a further ¥10,000 off the price.
Put another way, that’s ¥1,000 of debate every year, or ¥2.7 per day, until 01:00 every night.
Tough market? You bet.
