Recently, there have been reports that a new property in the Futian central area of Shenzhen is rumored to be sold at half price, with a three-bedroom apartment available for 3.58 million RMB. Real estate agents have stated that “this project has been on the market for a long time… and the turnover rate has not been ideal.”
According to the Securities Times, the property in question is located in the Bagua Ling area of Futian and the so-called “half-price reserve price” apartments are not traditional commercial apartments, but commercial office products with a 4.5-meter floor height. Some of the larger units have balconies and gas connections, allowing for personal purchases. However, most of the units are “construction funds offset housing,” priced at around 57% to 70% of the reserve price.
The term “construction funds offset housing” refers to properties where construction funds are offset against the property. These properties are typically offered by real estate developers to construction units and other parties to offset construction payments. The prices of these properties are lower as they first sign an agreement to offset debt with the property, then sign a sales contract to determine the price and specifics of the property, and use the debt offset agreement to offset the price.
This property is not the first to attract market attention with super discounts. Real estate agents have mentioned that “this project has been on the market for a long time, with office buildings, commercial apartments, and now vigorously promoted commercial office products, but the turnover rate has not been ideal.”
Similar commercial office products in Shenzhen’s market often sell at significant discounts. In 2023, an apartment project in Luohu was sold at nearly four-fifths of the reserve price. The property type was commercial office space, with the main building nature being an office building, not the traditional commercial apartments.
Reports indicate that some commercial office properties in Shenzhen’s market have a leasehold of 70 years, with gas connections and balconies. Commercial office spaces, with smaller areas and lower total prices, attract attention from buyers who focus on rental returns. Experts have stated that “commercial office properties with a 70-year leasehold are similar to residential properties, with slightly better turnover rates. However, the overall turnover of commercial office properties still remains challenging, let alone converting office buildings into residential apartments.”
Commercial office properties used to be a favorite for investors as there were no restrictions on purchases or loans. However, in the Shenzhen market, commercial office properties have never sold as well as residential properties. Therefore, offering discounts has always been the most commonly used promotion method for commercial office properties in Shenzhen, with some properties offering forward discounts. In addition to discounts, developers also include property management fees, family gift packages, and even giveaways of gold, “house swapping” events, and more.
Data from the Shenzhen Zhongyuan Research Center shows that in the first half of 2024, there were 1,337 apartment transactions in the city, a decrease of 62.4% year-on-year. Units under 3 million RMB accounted for the majority of transactions, making up 84.4% of sales.