Angry Mobs Show All's Not Well in China's Property Sector

(Bloomberg) -- Home buyers angry that apartments are being sold for much less than they paid swamped property developers’ marketing offices across China over the Golden Week holiday, demanding their money back.

A sales center for Xinzhou Mansion, a project of Country Garden Holdings Co. located in Shangrao, a city in Jiangxi province, was mobbed last Thursday, videos and pictures circulated on social media show, its windows smashed by scores of protesters throwing rocks. They’re furious that Country Garden is selling units for prices around 30 percent lower than a year ago.

Similar demonstrations took place at One Mansion in Shanghai, another of Country Garden’s projects. There, apartments are going for as much as 25 percent less than two months earlier. At Zhangzhou, a city in southeastern Fujian province, people protested outside the offices of a Ronshine China Holdings Ltd. project, waving banners that called the firm an "unscrupulous developer."

China’s Golden Week is typically a buoyant period for new-home sales as holiday makers get out and spend. But transactions this year were the lowest since at least 2014, according to China Securities Co., with much of the weakness felt in third-tier cities. Official home-sales data for October is due next week.

The unrest is a further sign that China’s toppy property market is beginning to cool. Firms in the nation are already offering free luxury cars and hefty reductions to shift stock, the discounts suggesting debt-laden developers are pulling out all stops to raise revenue. The sector faces a record $23 billion maturity wall in the first quarter of 2019 and Beijing’s attempts to keep a lid on home prices have made it harder for companies to generate swift cash from sales.

Developer shares dropped in Hong Kong on Tuesday, with Country Garden down as much as 4.5 percent after a 6.7 percent tumble Monday that was the most in 10 weeks. Agile Group Holdings Ltd. slipped as much as 2.8 percent.

Angry Mobs Show All's Not Well in China's Property Sector

The discounts being offered to would-be purchasers of Country Garden’s project in Shangrao are only for second-time home buyers, according to a Country Garden media official who asked not to be named, citing company policy. In Shanghai, the price cuts are only for projects in poorer areas, she said by phone Monday.

To contact Bloomberg News staff for this story: Emma Dong in Shanghai at edong10@bloomberg.net

©2018 Bloomberg L.P.

With assistance from Editorial Board