8.6 C
Monday, May 27, 2024
Home Business 25%! The Most Discounted Chinese Real Estate Company

25%! The Most Discounted Chinese Real Estate Company

In the past few days, Evergrande hit a beautiful set of boxing punches and got the limelight.

First, on February 13, Evergrande introduced an 88-day lock-in purchase policy. Buyers fancy a certain source of suites in Evergrande. They only need to pay a 5000 yuan deposit online on the “Hengfangtong” platform and sign the “Commercial Housing Online Subscription” to book a listing.

Online subscription book, Evergrande
Online subscription book, Evergrande

Customers who sign an online subscription book and lock a set of properties for 5,000 yuan enjoy too many benefits:

  1. 5000 yuan means 20,000 yuan for the total housing payment;
  2. If you recommend someone to buy a house successfully, you can get a 1% commission bonus plus 10,000 yuan bonus, and 5,000 yuan refund at the same time;
  3. If the locked house is seen by others and paid the down payment in advance, the subscription fee of 5000 will be refunded and the compensation will be 5,000 yuan;
  4. If the house locked before May 10th is not sold successfully, the 5000 yuan subscription fee will be returned unconditionally;
  5. Each recommended new subscription customer will be rewarded with 100 yuan, up to 500 yuan.

This series of reward clauses have caused many people to be dazzled by happiness and shouted that the opportunity for taking advantage is coming!

Is Boss Xu’s wool so easy to get?

"Get wool", in Chinese means taking advantage
“Get wool”, in Chinese means taking advantage

First of all, a deposit of 5,000 to 20,000 is a common routine for developers, and it is not unusual.

Secondly, Helping Evergrande to sell a house for 1 point plus 10,000, it sounds a lot. In fact, if a developer uses a secondary distribution agency to sell a house, a set of commissions starts from at least 3 points. Such a comparison, national marketing is really too cost-effective.

Thirdly, the locked house was bought by others first, and the compensation was 5,000. Many people want this benefit.

But in fact, once the listing at the sales office is locked, it will not be released again unless it is difficult to find a house for sale. If you want to earn 5,000 yuan, it will be quite difficult.

Finally, before May 10th, if this house was not bought by others and you did not buy it, 5000 yuan will be returned to you.

It sounds like money can be withdrawn, not bad! However, if the money is not refunded, will you make a decision? Most people are rushing to fleece the wool, not to buy a house. Moreover, this 5000 yuan was turned over by Evergrande for 88 days with no interest.

Real estate of Evergrande
Real estate of Evergrande

On February 16th, Xuefei Liu, vice president of Evergrande Group, announced at a press conference that since the “online purchase of houses” on February 13, various sales data have shown explosive growth, and customers subscribed for 47540 houses.

I figured it out, there were 47,540 units with a subscription of 5,000 yuan each, and the total subscription money reached 237.7 million yuan, with interest-free use for three months.

What is the current cost of issuing debt to Evergrande?

From January 16th to 21st, Evergrande entered into purchase agreements with Credit Suisse, Bank of America Securities, BNP Paribas, CCB International, and UBS, etc. Evergrande will issue four senior notes totaling $ 6 billion, expire in 2022, 2023 and 2024 respectively, with interest rates ranging from 11.5% to 12%.

In other words, Evergrande’s recent borrowing cost is 12%.

The subscription fee of RMB 237.7 million is an annual interest rate of 28.25 million yuan at an interest rate of 12 points. The 88-day interest cost is 6.87 million yuan.

Of course, the 6.87 million is just a little for Evergrande, but since it’s free, why not use it?

Besides, Evergrande’s massive operation, the subscription is only an appetizer, the really good show is behind.

On the afternoon of Feb. 16th, the huge preferential red-headed documents issued by Jiayin Xu were circulating on the Internet.

Red-headed documents issued by Jiayin Xu were circulating on the Internet
Red-headed documents issued by Jiayin Xu were circulating on the Internet

From February 18 to February 29, 2020, Evergrande’s residential properties (including apartments and office buildings) for sale can enjoy a 25% discount.

On the basis of the 25% discount, Evergrande has also superimposed a series of dazzling discounts, 7% off, one-time payment, a single building with a removal rate of 80% or more, and an additional 3% discount, etc. It is said that the minimum can reach 64%.

If this type of jump-off discount is selling health products and god oil, I believe, if it is selling a house, it would be incredible.

Evergrande Group
Evergrande Group

According to Evergrande’s financial report for the first half of 2019, revenue in the first half of the year was 226.98 billion yuan, net profit was 27.06 billion yuan, and profit margin was 11.9%.

Evergrande worked hard for a year, earning 12% of its profits, and boss Xu made a big splash, giving 25% of the profit and 13% of the net loss.

Moreover, 13% is a starting loss and a minimum of 64% off with a 24% loss.

The account here is a bit wrong. The boss Xu is selling a house, not for charity.

Moving forward, we finally found out that Evergrande was the most passionate developer that enjoying discounts in China.

Real estate discount, Evergrande Group
Real estate discount, Evergrande Group

Starting from 2016, the discount rate is from 90% to 88%, to 87%, to 82%, and then to 78%. The discounts are endless, there is no maximum, only greater.

Real estate discount, Evergrande Group
Real estate discount, Evergrande Group

Evergrande’s discount routine is very similar. Release a bright discount first, then stack some other discounts, at last, check out without reason.

After a careful comparison, you will find that this discount activity is nothing new. It is a replica of Evergrande’s discount routine for many years. But this time, Evergrande’s old bottled new wine has achieved great success, thanks to four points:

First, the discount fell to a new low and became 25% off;

Second, start running in advance during the epidemic, earning enough attention;

Third, add a plot, and a warm-up activity of 5,000 yuan locked in advance, making the process a twist and turn, more beautiful;

Fourth, spend a lot of money to make a large wave of promotion.

The most critical question is the average profit rate of 15 points in the real estate industry.

Why does Evergrande dare to hit 30% or 20%off?

The reason lies in Evergrande’s project layout.

Real estate discount, Evergrande Group
Real estate discount, Evergrande Group

Evergrande has more than 1,200 projects in China, most of which are located in third and fourth-tier cities. Evergrande is similar to Country Garden. They are keen to racehorses on the third and fourth-tier cities and adopt a strategy of surrounding the city by the countryside.

This aspect reflects Evergrande’s development strategy, focusing on the third and fourth lines, but not the first and second lines.

The cost of land acquisition in the first and second lines is high and the profit is low. There is basically no need to worry about losing money, which is conducive to improving brand reputation.

Taking land on the third and fourth lines, especially in the suburbs of the third and fourth lines, is a low cost, high profit, and high risk.

The third and fourth lines have high requirements for the project’s operational capacity and operating cycle. If the time node is met and the project is publicized, a project can make a huge profit; if the site is not selected properly or the timing is wrong, the mire will sink. The project has been sold for five or eight years but still has a lot of inventory.

In addition, there is considerable room for flexibility in the filing prices of the third and fourth-tier projects. In particular, the third and fourth-tier suburbs lack real estate for benchmarking projects, and the price is very arbitrary. You only need to report a relatively high filing price in the early stage. After the government approves it, you can make advances and retreats, discounts and concessions.

Real estate discount, Evergrande Group
Real estate discount, Evergrande Group

Evergrande has a lot of real estate on the third and fourth lines. The normal discount for visiting is very scary. The house with a registered price of 10,000 can be sold to you after being discounted by more than 8,000 or even less.

When Evergrande conducts activities nationwide, all sales offices will recover the usual activity discounts and follow the discounts set by the headquarters. They are all selling houses at a discount, and there are unified promotion and endorsement by the headquarters.

Seeing here, if there is still unwillingness, you must get Evergrande’s wool, saying that I do not buy a house in third and fourth cities, I buy a house in front and second cities. The front-line houses are clearly marked with real prices. The record price is under pressure from the government and can’t be overstated, the sales office can’t usually discount that.

Then you are really naive. Evergrande doesn’t pay attention to the first-tier cities, that’s not just fun. There is only one Evergrande in Beijing that has an end-sale for a total price of 30 million. Shenzhen has no Evergrande houses for sale, only a few apartments; Shanghai has no Evergrande properties for sale.

If you are still not willing to say that there are many second-tier cities, sorry, in the “No Reason to Check Out Agreement” published by Hengfangtong, there is a line of small characters hidden at the bottom, you can see with a magnifying glass: Some properties are not participating in the offer.

Some properties are not participating in the offer.
Some properties are not participating in the offer

So, if you want to get boss Xu’s wool and buy a good house with a 25% discount in the first and second-tier cities, isn’t your brain broken?

Finally, I have to say something fair to Evergrande.

Jiayin, Xu
Jiayin, Xu

Although Evergrande’s discount activities have lasted for many years, various discounts are not new. However, the 25% discount this time is indeed the lowest discount in history. If the record price remains unchanged, it is indeed a great discount to give 3 points more than the previous lowest discount of 78%.

There are so many real estate projects in Evergrande across the country, especially those in the 3rd and 4th lines, and there are still houses worth buying.

For example, there is just one apartment in Shenzhen, Evergrande Fashion Valley, also participated in this event. This real estate is located in Longhua. The unit price is not high at only 30,000, and after the one-time 25% discount is only 22,200. The profit margin is very large. As far as I know, many of Evergrande’s internal employees have subscribed.

In 2019, Evergrande’s annual sales are 601.06 billion, and its mission in 2020 is 650 billion.

In January 2020, Evergrande achieved sales of 40.55 billion yuan, compared with the annual task of 650 billion, only 1/16 is completed. In February, the coronavirus epidemic broke out, and Evergrande’s stock fell all the way.

For Evergrande, running high-profile in advance is not only to strive to complete the annual sales task but also because companies like Evergrande rely heavily on high turnover and cash flow.

At present, Evergrande’s activities have been quite successful. During the quiet special period of the housing enterprises, Evergrande fired its first shot!

Stock of  Evergrande
Stock of Evergrande

Although the profits have been diluted, it has earned enough attention, raised the stock price, cleared a number of third and fourth-tier houses, and won time and cash flow.

Avatar photo
Nancy Huang
I'm a journalist in Shenzhen, China. I have been working in several news agencies in China since 2008.


Please enter your comment!
Please enter your name here

- Advertisment -

Most Popular

The Sweetest Pear in Autumn

There is a pear in Dangshan, Anhui Province. It is firmly seated on the throne of the first of the three traditional...

This Lake Has the Most and Cheapest Fish

Recently, Mr. Liu, a citizen of Lu'an City, Anhui Province, said that the water level of Chengxi Lake had dropped sharply, this...

The Most Popular Luosifen in Taiwan

On August 5th, the news that the map could show every street in Taiwan Province spread, and many netizens went to find...

China’s Longest Wooden Arch Bridge Are Burned Down

On the evening of August 6, a fire broke out at the Wan'an Bridge in Pingnan, Ningde, Fujian, a key cultural relics...

The Best Watermelon Kingdom

A Chinese folk proverb says: Eat watermelon in summer, you don't need to take medicine. 8424, watermelon

The Sweetest Grapes Are Here

It is said that the grapes in Turpan are good. According to preliminary statistics, more than 500 varieties can be called the...

The Most Delicious Cherry in Dalian

When many people see plump and textured cherries in the supermarket, they can't help but say, "Are these cherries?"Well, he really doesn't...

The Most Delicious Peach that You Can Drink

Wuxi Yangshan Town has a history of growing peach for more than 700 years, and is well-known as the "Hometown of Chinese...

The Most Expensive Cabbage, One for 50 Yuan

According to South Korea's "World Daily" report on the 26th, due to the soaring price of Korean cabbage recently, the price of...

The Most Delicious Mongolian Milk Tea

In Hohhot, Inner Mongolia, the first ray of smoke rose from an old milk tea house in the early morning. At five...

The Most Popular Luxury Train Tours in China

In this hot summer this year, high-end train tours are quietly emerging in China. From Urumqi to Turpan Ring Road, from Hulunbuir...

Highest Temperature, Tourists from all over the Country Flock to Yunnan

Since July, high-temperature warnings have been issued frequently across the country, and finding a cool place has become the first choice for...