Facing a sluggish real estate market, a developer in China has turned to the ultimate incentive to sell apartments by offering free gold bullion to buyers.
Hangzhou Hua’an Property Company has been offering a kilo of gold—equivalent to 35 ounces—for buyers who purchase a 100 square meter apartment in the Lin’an District of Hangzhou in eastern China, according to local media reports. The apartments sell for about $350,000. With a kilo of gold worth nearly $70,000, the offer amounts to a 20 percent discount on the apartments.
In fact, the offer is a method of offering buyers a “stealth discount” because some Chinese cities have banned unapproved price cuts for real estate, an attempt to prop up the market.
China’s overbuilt property market is in a serious slump, with sales declines in the double digits in many cities. Some investors expect municipalities will have to withdraw their artificially imposed price floors, and investment firm Goldman Sachs has predicted that Chinese real estate is likely to see “persistent weakness” for years, particularly in smaller cities. Adding to real estate worries is anticipation that the government may soon impose a property tax on homeowners.
Buyers who purchased apartments from Hangzhou Hua’an prior to the gold offer are reportedly furious, while some buyers who took the offer say they are still waiting for their gold. A sales representative for the firm told Chinese media that the bars are hard to come by due to fluctuating prices.
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