Summary of Key Points
The luxury residences at Vanke Zhen Shan Fu in Shenzhen, which were so popular 9 years ago that they were almost impossible to obtain and even required a “tea fee” (a gratuity) to secure a purchase, are now being offered for sale in batches through the Shenzhen Stock Exchange (with more to be released in the future). These units come from the second phase of the development, which did not sell out completely. They were previously rented out as rental housing for high-end professionals for 4-5 years and are now available as vacant, off-the-plan properties, with prices ranging from 34.81 million to 41.2 million RMB. The move is part of Vanke’s strategy to revitalize its assets and generate cash.
1. What exactly are these suddenly available properties?
These properties are not second-hand homes but rather off-the-plan units that Vanke itself did not sell. The details are as follows:
- Location: Xiangmi Lake-Antu Mountain area in Futian, Shenzhen (a region known for its luxury residences);
- Unit size: 240 square meters (the same as the previously sold units);
- Status: They were rented out to high-end professionals for 4-5 years and are now vacant;
- Sales method: They can be purchased individually, not as a whole building. A total of 10 units are being offered for sale this time; 14 units were listed in July, with more to follow.
2. Why have these once highly sought-after luxury residences been held onto until now?
Vanke Zhen Shan Fu was once the pinnacle of luxury housing in Shenzhen: the first phase was sold 80% of its units upon release in 2017, the second phase sold out on the same day in 2018, and the third phase’s 397 units were almost completely sold within half an hour. Some people even had to pay a “tea fee” to get a chance to purchase a unit. Why were they held onto instead of being sold?
- Attraction of price differences: At the time, new housing was subject to price restrictions; the recorded price for the second phase was only 97,500 RMB per square meter, while nearby second-hand homes were selling for 120,000 RMB per square meter, and at their peak in 2021, they reached 210,000 RMB per square meter. The developer felt that selling too early would result in a loss, so they decided to rent them out for rent and wait for the market price to be more favorable before selling.
- Policy changes: In 2018, in response to policies encouraging rental housing, the 5 buildings were designated as rental housing for high-end professionals and could not be sold. Now that the policies have changed, the developer is deciding to sell them to realize cash.
3. Is it a good deal to buy these properties now?
Let’s do some cost calculations:
- Looking at the price per square meter: With a total price of 34.81 million to 41.2 million RMB for 240 square meters, the price per square meter ranges from approximately 145,000 to 170,000 RMB.
- Compared to the past: Prices have increased! The recorded price for the second phase was 97,500 RMB per square meter, so they have risen by nearly 50%.
- Compared to the peak: They are cheaper than the peak price of 210,000 RMB per square meter in 2021, representing a 20%-30% reduction.
- Compared to the current market: The current second-hand price for luxury homes in Futian, Shenzhen, is around 150,000 to 180,000 RMB per square meter. These units are at a moderate price level; they are not a bargain, but they are not considered a “steal.”
- Note: Real estate agents mention that the decoration in these 5 buildings is slightly inferior to that in other units, so this should be taken into consideration when purchasing.
4. What signals does Vanke’s decision to sell these properties send?
1. Financial pressure and need for cash: Investors have asked why Vanke hasn’t sold the buildings to repay debts, and Vanke has stated that it is trying to revitalize its assets and generate cash (many real estate companies are facing financial difficulties).
2. Changing market expectations: Previously, the developer hoped to wait for higher prices, but now they may believe that housing prices will not return to their 2021 peak, so it’s better to sell while the prices are still decent.
3. Policy shifts: The policy supporting rental housing for high-end professionals may have eased, or Vanke may no longer wish to continue with rental programs and prefer to sell the properties for cash.
For the Shenzhen luxury housing market, the introduction of these units increases the supply and could help stabilize nearby luxury property prices, preventing them from rising as sharply as before.
5. What can ordinary people learn from this?
- Luxury homes are not always in short supply: Properties that were once unobtainable are now being sold, indicating that there is no absolute “unavailability” in the market.
- Developers’ strategies: When faced with price restrictions, they often hold onto properties in hopes of higher prices, which is a common practice in the industry.
- Market cycles: After the peak in 2021, housing prices have declined, and selling now is a way for developers to adapt to the market trends.
In summary, the release of these units reflects Vanke’s need to manage its assets and also signifies a shift in the Shenzhen luxury housing market from a period of frenzied buying to a more rational supply situation.
(The entire analysis is written in plain language to ensure clarity and ease of understanding.)