Cutting prices are the buzz words for mainland property developers in spring. Top developer China Evergrande will slash new home prices by 10% and office space by 20% to stimulate sales, according to the Paper in China.
Chairman Hui Ka-yan, or Xu Jiayin in Mandarin, made such an order in the monthly sales meeting and promised to go around different sites to implement the sales strategy. China Evergrande has 24 new projects among the 690 projects it has and aims for a sales target of 600 billion yuan (US$89.6 billion).
In January, China Evergrande recorded sales of 43.17 billion yuan, down nearly 33%. The average price was about 11,100 yuan per square meter. If the price cuts are not enough, they may try reducing their head count as well.
Rival Country Garden is said to be restructuring its group and some departments may see their workforce slashed. Lay-offs are not common among the property sector, but it is not known how extensive the Country Garden restructuring exercise will be.
It was reported in the mainland press that Country Garden held a senior management meeting with nine department heads, including the CEO’s office, cost center, procurement center and digital department. And after the meeting, it was rumored that those departments not called to the meeting, such as property development, overseas business and design management, may be among those who will get the big envelop soon.
Country Garden executives denied the meeting was about retrenchment, saying it had never laid off staff. Although the market outlook is neutral, Country Garden is confident about growing its business.
The No.1 real estate developer in China – and the world in property sales – recorded 33 billion yuan in sales in January, down 52% from the same period last year, according to the company’s releases. Last year the company reported contract sales of more than 500 billion yuan, up 31%.