KUALA LUMPUR, Aug 25 — Cash-strapped developers in mainland China are ramping up their efforts to attract homebuyers, offering incentives like private jets and permanent residency in major cities as central and local authorities’ attempts to revive the property market fall short.

South China Morning Post (SCMP) reported that this month, China Merchants Property’s Nanjing branch revealed that buyers of one of its developments would receive perks such as flight lessons and a 5 per cent stake in a private jet. This move came after a previous advertisement went viral on social media where buyers would be "gifted private jets.”

Meanwhile, several cities across China, including major urban centres like Suzhou and Wuhan, have attempted to boost demand by offering non-local homebuyers the opportunity 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, was quoted as saying.

"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.”

Since regulatory support has remained limited due to policymakers’ efforts to decrease the economy’s dependence on the property sector, private developers have had to rely on their own resources to sell homes following Beijing’s 2020 "three red lines” policy and the collapse of China Evergrande, which sparked a nationwide property crisis. In contrast, state-backed developers, particularly those with strong connections to local governments, may have access to greater financial support, she noted.

The property market of the world’s second-largest economy has yet to show signs of recovery. Home prices in 70 major cities declined for a 14th consecutive month in July, according to the National Bureau of Statistics, while sales generated by the country’s top 100 developers slumped 36.4 per cent month on month to 279 billion yuan, as shown by data from China Real Estate Information Corporation.

SCMP noted that regulators are intensifying their efforts to revive the property market. In May, the Chinese central bank introduced a 300 billion yuan relending facility for local governments to buy unsold homes and convert them into affordable housing. Additionally, the national lower limit on mortgage rates for first and second homes was removed to stimulate demand.

Local governments, although slow to make significant progress in reducing housing stock, have rolled out more than 70 measures over the past month to boost liquidity in the market. Cities like Beijing, Nanjing, Qingdao, and Guangzhou have implemented policies encouraging residents to trade old homes for new ones. Guangzhou has even lifted restrictions for non-mainland citizens to purchase homes in the city.

Furthermore, local authorities are reportedly planning to issue special bonds to finance their home purchases and inject funds into struggling developers. Analysts view this approach as more favourable than the relending facility due to the bonds’ lower funding costs.

As the housing market continues to underperform, developers in second-tier cities are adopting more aggressive marketing tactics compared to their counterparts in first-tier cities like Beijing and Shanghai. In these major urban centres, developers tend to be more restrained in their promotional efforts due to stronger demand, SCMP said in the article.

In China’s most expensive cities, Beijing has experienced the largest decline in home prices, with August prices dropping 32 per cent year-on-year to 43,006 yuan per square metre, according to E-house data. Guangzhou saw a 3 per cent decline with prices down to 12,015 yuan per square metre.

However, Shenzhen saw a 2 per cent increase in prices to 65,746 yuan per square metre, while Shanghai reported a 6 per cent rise, with prices reaching 75,568 yuan per square metre, defying the general market decline.

"Higher-tier cities with stronger economic fundamentals, better demographic prospects and potentially stronger local government financing may have more flexibility in rolling out new policies [to boost the property market],” said Tyran Kam, senior director of Asia-Pacific corporate ratings at Fitch Ratings told SCMP.

"However, in the absence of more broad-based support policies from the central government, we believe home price pressure, including in the higher-tier cities, will likely persist in the near term.”