Chinese developers, cities tempt homebuyers with perks like private-jet shares, residency

‘Developers cannot cut sales prices freely, so they offer more valuable incentives which serve as de facto discounts,’ an analyst says

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A China Vanke residential project under construction in Nanjing, Jiangsu province, China, on March 12, 2024. Photo: Getty Images

Published: 9:00am, 25 Aug 2024Updated: 9:24pm, 25 Aug 2024

From private jets to permanent residency in major cities, cash-strapped developers in mainland China are offering increasingly aggressive incentives to attract homebuyers as efforts by central and local authorities to rescue the property market fall short.

This month, the Nanjing branch of the state-owned property developer, China Merchants Property, announced that purchasers in one of its projects would be eligible for perks including flight lessons and a 5 per cent stake in a private jet. The ploy followed an earlier advertisement claiming that buyers would be “gifted private jets”, which went viral on social media.

Meanwhile, a handful of cities across China, including major urban hubs such as Suzhou and Wuhan, have tried to entice buyers and stimulate demand by announcing that they would allow non-local homebuyers to apply for residency.

“Since the beginning of 2024, developers and local governments have been continuously introducing aggressive supportive policies,” said Xiaoxi Zhang, China finance analyst at Gavekal Dragonomics, a market research firm. “Due to price controls on new housing sales, developers cannot cut sales prices freely. So they offer more valuable incentives which serve as de facto discounts.”

As regulatory support “has always been marginal” due to policymakers’ efforts to reduce the economy’s reliance on property, private developers have had to rely on their own resources to sell houses after Beijing’s “three red lines” policy in 2020 and the the collapse of China Evergrande triggered a nationwide property crisis. In contrast, state-backed developers, especially those with close ties to local governments, may secure more financial support, she added.

But regulators are ramping up their efforts. In May, the Chinese central bank issued a 300 billion yuan (US$42 billion) relending facility for local governments to acquire unsold homes and turn them into affordable housing, while also removing the national lower limit on mortgage rates for first and second homes to generate more demand.

Local governments, while slow to make tangible efforts in clearing housing stock, have issued more than 70 measures over the past month to boost liquidity in the housing market. Beijing, Nanjing, Qingdao and Guangzhou have all implemented rules encouraging residents to sell old homes “in exchange” for new ones, with Guangzhou even formally lifting curbs for non-mainland citizens to purchase homes in the city.