Car park prices soar on Chi­nese bun­dled home pur­chase deals

Prop­erty de­vel­op­ers un­leash se­cret weapon to beat home price caps by mu­nic­i­pal au­thor­i­ties

Business Daily (Kenya) - - MONEY & MARKETS GLOBAL -

The cost of car park­ing spa­ces in new apart­ment projects in some Chi­nese cities is soar­ing as de­vel­op­ers roll out their lat­est se­cret weapon to counter home price caps im­posed by mu­nic­i­pal au­thor­i­ties.

As if con­tend­ing with sky-high home prices wasn’t enough, some buy­ers are now forced to fork out as much as one mil­lion yuan ($151, 821) for car park­ing spa­ces in ma­jor sec­ond-tier cities, such as Tian­jin, Xi­a­men, Hangzhou, nan­jing and Suzhou. They are sold with an apart­ment worth as lit­tle as 2.4 mil­lion yuan, in bun­dled deals that make it com­pul­sory for res­i­dents to pur­chase the park­ing space.

“There’s a price cap on apart­ments, but not on park­ing spa­ces, so we’re bun­dle-sell­ing them with apart­ments to com­pen­sate,” said a Shang­haibased de­vel­oper who de­clined to be iden­ti­fied due to the sen­si­tiv­ity of the is­sue.

“Re­cently we sold park­ing

spa­ces in Xi­a­men for over 1 mil­lion yuan each. Last year one only cost less than 200,000,” he said, re­fer­ring to spa­ces in the port city in Fu­jian prov­ince in south­east­ern China.

To fend off spec­u­la­tors and defuse a hous­ing bub­ble, ma­jor cities across China have slapped a se­ries of re­stric­tions on prop­erty mar­kets, in­clud­ing im­pos­ing lim­its on de­vel­op­ers’ sell­ing prices.

That’s prompted prop­erty com­pa­nies to find ways to ride out the tight­en­ing mea­sures or skirt them, in­clud­ing de­lay­ing the launch of new home sales in the hope that when au­thor­i­ties re­lax some rules, buy­ers will jump back into the mar­ket and

they can re­lease more sup­ply at higher prices.

Top-tier cities such as Shang­hai and Bei­jing have seen a surge in car park prices in the past three to five years, with some ask­ing prices over one mil­lion yuan, mostly due to a mas­sive short­age.

But sec­ond-tier cities are catch­ing up in the past year, and this time driven by bundle­selling, prop­erty agents said.

As China’s car park mar­ket­place is not ac­tive and trans­par­ent, it is un­clear ex­actly how much av­er­age prices have gained in dif­fer­ent cities in the past few years.

“In al­most ev­ery city with a price cap pol­icy in place, if they al­low de­vel­op­ers to bun­dle-sell car park spa­ces, it is hap­pen­ing,” said Cle­ment Luk, the CEO for east­ern China at re­al­tor Cen­taline.

“In the past, in cities like Nan­jing and Suzhou, many car park spa­ces were be­low 100,000 yuan, but now many cost over 300,000. Is this a nat­u­ral price ap­pre­ci­a­tion? Def­i­nitely not.”

He said the bundling had been adopted to skirt price cap poli­cies and ma­nip­u­late sell­ing prices. Au­thor­i­ties in Hangzhou, Nan­jing and Tian­jin did not re­ply to emails for com­ment. Of­fi­cials in Xi­a­men and Suzhou could not be reached by email or phone.

Shi­mao Prop­erty, a higher-end de­vel­oper based in Shang­hai, said at an earn­ings con­fer­ence on Tues­day that when it is seek­ing a pre-sales per­mit for a devel­op­ment it does ask the au­thor­i­ties con­cerned if it can raise some prices for ren­o­va­tion costs and car park­ing spa­ces, said vice-pres­i­dent Ja­son Hui.

Bun­dled deals that make it com­pul­sory for res­i­dents to pur­chase the park­ing space

SE­CRET WEAPOR An eight-storey, three di­men­sional car park build­ing that can hold up to 312 ve­hi­cles in Shenyang, in China’s Liaon­ing prov­ince. --AFP

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