Even in tech hub Shenzhen, China’s assets current market succumbs to chills

SHENZHEN, China, Nov 29 (Reuters) – Existence utilised to be excellent for Jerry Tang, who left his rural hometown in 2014 to become a real estate agent in Shenzhen – China’s tech megacity and 1 of the world’s hottest home markets.

Just a handful of years in the past Tang could make up to 50,000 yuan ($7,800) in a good thirty day period offering apartments. Final calendar year, he was making close to 15,000 yuan a thirty day period, but this calendar year that’s fallen to about 5,000 yuan and mainly comes from commission on rentals.

“It truly is certainly considerably more difficult to market this yr,” he claimed. “Prospective buyers are waiting to see what transpires with the current market, although builders are income-strapped, they are getting time to pay commission to agents.”

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In Shenzhen – property to 17.6 million people and corporations like gaming powerhouse Tencent Holdings Ltd (0700.HK) and telecommunications huge Huawei Systems (HWT.UL) – some scaled-down real estate agent workplaces have closed. 8 actual estate brokers Reuters spoke with also say at the very least a third of their colleagues have either left the sector or are imagining about it.

Lianjia, a significant realtor, plans to shut down a fifth, or about a hundred, of its offices in Shenzhen, fiscal information company Caixin reported in September, citing an inner memo. Lianjia and its guardian corporation KE Holdings did not react to requests for comment.

The lack of turnover in Shenzhen’s house marketplace and the fallout on the city’s actual estate brokers stems in aspect from deliberate policy attempts above the past yr by community authorities to make condominium selling prices extra affordable, together with necessitating greater down payments for 2nd properties and capping resale selling prices.

But real estate brokers say it also owing to the current crisis of confidence hitting China’s residence business, highlighting just how extensively the sector’s woes are reverberating. If Shenzhen – emblematic of China’s meteoric economic increase over the past 40 yrs – is not immune, then couple areas in the region are.

China’s house current market, which accounts for a quarter of GDP by some metrics, has been struggling unprecedented tension just after policymakers this 12 months released personal debt caps to rein in extreme borrowing by developers.

That in transform has served lead to liquidity crises at developers these as China Evergrande Group (3333.HK), the world’s most indebted developer, and Kaisa Group Holdings (1638.HK). Both of those of them also happen to be headquartered in Shenzhen. Policymakers are, however, widely expected to stand firm on the new principles which are perceived as essential reform.

Price ranges for new residences in Shenzhen fell .2% in October from a thirty day period earlier – their 1st fall this yr – and in line with the nationwide ordinary. It stays to be seen, however, if Shenzhen’s property costs will suffer the a lot more sustained, albeit continue to modest declines that have strike some second-tier Chinese cities this calendar year.

In its favour, the southern tech hub’s financial system is not substantially scaled-down than that of fellow megacity Shanghai’s but Shenzhen has only a third of the land, ensuring strong underlying demand for apartments.

“Customers are involved about Evergrande and contagion, but in Shenzhen they know other developers would step in to complete jobs if they experienced to,” Tang said.

For some, the tougher curbs and subsequent property current market chills are a indicator that speculative buying – often rampant in China as historically there have been handful of other financial investment possibilities – could turn out to be a detail of the previous.

“My parents’ generation could close their eyes and point someplace to make investments their dollars and get a wonderful return – they could gamble,” explained Lisa Li, who will work in the expenditure field and recently purchased a modest studio apartment but found the course of action nerve-wracking.

“Our era are not able to do that, we would be in issues,” she stated.

That is chilly ease and comfort, on the other hand, for Tang, 30, who states he is contemplating of changing jobs.

“I have to have financial savings if I’m to come across a girlfriend, and I am supporting my mum again house.”

($1 = 6.3836 Chinese yuan)

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Reporting by David Kirton More reporting by Clare Jim in Hong Kong and Liangping Gao in Beijing Enhancing by Ryan Woo and Edwina Gibbs

Our Criteria: The Thomson Reuters Rely on Concepts.