Desperate Chinese property developers are getting more creative, if not downright strange, with the marketing tactics they are deploying in an ongoing real estate crisis.
One company in Tianjin advertised “buy a house, get a wife for free,” The Wall Street Journal reports. Another company in China’s Zhejiang province promised gold bars to home buyers.
The free-wife deal was a pun on a traditional Chinese expression, styled in the same wording as typical enticements for home buyers (no actual wives were part of the promotion). But it didn’t sit well with Chinese regulators, who fined the company $4,184 fine for the ad in September.
China’s real estate bubble popped about two years ago, when real estate developer Evergrande declared insolvency, setting off a chain reaction of defaults and business losses that have dragged down the Chinese economy.
Several multibillion-dollar companies have all but collapsed and Chinese business executives have been detained or have disappeared. The shadow banking industry that financed much of China’s real estate boom is going bust, including Zhongzhi Enterprise Group, which has told investors that it’s “severely insolvent” with $64 billion in liabilities.
Existing home prices in the nation’s four wealthiest cities are down between 11% and 14%. Sales of new homes are down 6%. Sheng Songcheng, former head of the statistics department at the People’s Bank of China, predicts the downturn will last another two years, the Journal reports.
China’s economy, which grew by the double digits a decade ago, grew by 5.2% in the fourth quarter, missing economists’ expectations. In addition to the real estate crisis, it’s been dragged down by high youth unemployment and international trade tensions.
“With investment in the property sector falling, the economy is more dependent on the manufacturing sector and service sector,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, said in a recent note. “This transition will take time to be accomplished. The key question in the market is when the transition in the property sector will finish.”