Property Online Auctions - New Tricks by Developers

The recent sluggish performance of the real estate market has many developers racking their brains, trying to figure out how to boost business. Now they're putting their properties online and waiting for a good auction price.
But will this new stunt bring real profit?

Let's take a closer look with reporter Liu Min.

It's quite usual to bid for a product like a digital camera online for a good price. But it's unusual to see bid for an apartment.

Now apartments or a commercial stores can be auctioned online, which are priced at low of zero yuan to up to a top price like several million yuan. Recently, some developers have chosen to sell their properties in this way, including Poly, Vanke and Green Land property companies. President of China Soho Property Company Pan Shiyi also puts his property online.

"Now there are nearly one hundred people bidding for the property at the same time. Here I give you an example: A property's limit price set by the government was 11 million yuan. The record shows, a buyer offered the top price eight seconds after the auction started."

Many properties up for online auction claim to offer a lower price than the market average in order to lure bidders.

Currently, most of the properties are chosen from those that are only recently put on the market. Chen Zhi, Deputy Secretary-in-Chief of the Beijing Real Estate Association says it's being trialled among many property developers now.

"During this kind of experiment, they attract more attention. In terms of market strategy, it's also a kind of promotion. Online auctions and on-site sales can be a good combination."

The stringent real estate administrative policy has given the property market severe blows since it was introduced half a year ago. Many real estate developers are facing challenges on capital chain breaks. Many property developers admit that they are facing high pressure to maintain a consistent capital flow. Online auctions can help them at least get some of their money back. Pan Shiyi is one of them.

"The market has been quite depressed since the current policy of limiting purchasing was put in place. The trading volume in Beijing now is only half the amount at the same time last year. Developers can't always play the dominant role in the market. Facing such sluggish demand, we have to come up with some new ideas to continue the game."

But for many home buyers, this kind of trading is questionable.

"I can accept the idea of buying a cloth or a little gadget online, but houses?"

"Normally we need to make decisions after some comparisons and be very cautious. It's not wise to rush a deal at this moment especially when houses are still quite expensive."

Currently, the auction process online only shows some bidders' online ID or mobile phone number, without indicating their real identity. Deputy-Secretary-In-Chief of Beijing Ecommerce Association Wang Zhiquan warns the on-going property auctions now could have some loopholes.

"The whole bidding process is usually not released to the public. Then it's quite easy to process the deal in the dark. The top price the buyers offer in the end may be lower than the price expected by the developer, and then the developer could create a higher price in the system and end the deal. But actually it could just be an abortive auction. You'll never get the house at a lower price than the expected one."

Property Market Experts say no matter what kind of strategy the developers adopt, the overall market situation won't change because property prices will not rebound as long as the government continues to enforce the current policy.

For CRI, I'm Liu Min.