China Vanke, the country’s second-largest property developer by sales, on Wednesday said it was offering 200,000 yuan (US$28,800) in compensation to buyers at its Shoukai-Vanke Bailujun Project in Xiamen for “design adjustments”.
The offer comes after Vanke recently lowered the selling prices of the project, which has been on sale since October 2017, by 40 per cent. A 92 square metre fully furnished house with a car park was being sold for 5 million yuan. Last month, the company started offering unfurnished houses without parking for 2.8 million yuan.
Vanke has denied social and mainstream media reports that it had agreed to pay 1 million yuan each to the more than 100 buyers who bought the houses at their original prices, and said the compensation it was offering was for a change in design.
The company said it had decided to change the design in relation to hot water springs at the project and would offer remedies to the affected buyers.
“The hot spring to home design cannot meet users’ needs after further studies, and we have decided to take out that part from the original plan at this project. We apologise for it and have offered two compensation plans to affected buyers,” the company said in a statement.
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The affected buyers who accept the change will get the 200,000 yuan as compensation, and those who decline the new design can terminate their sales contracts and Vanke will refund them their money.
Analysts said the so-called design change was actually a way for Vanke to appease its buyers who had paid higher prices, and to nip any complaints and protests in the bud.
Last week, angry buyers protested outside a Country Garden residential project in Shangrao in Jiangxi province, and at another project by the developer in Pudong, in Shanghai, after the company announced a price cut of up to 30 per cent at these two developments.
“The market has turned soured and we will see more developers offering discounts to lure buyers. The compensation will not impact Vanke’s financial position much, and at the same time the developer can maintain its relationship with buyers and prevent disputes,” said Yan Yuejin, director at E-house China R&D Institute in Shanghai.
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China’s real estate market is starting to soften after a long period of growth, and many property developers have adopted a number of marketing strategies since late September to capitalise on the holiday season. Vanke unveiled the slogan “To survive” during a two-day conference in Shenzhen that ended on September 29.
The sell-through rate, which compares units sold with the total units available in a new project, thus indicating its popularity, declined in 11 cities in August and 16 cities in September, according to statistics from consultancy China Real Estate Information Corporation.