The country’s real-estate slump is getting worse—and looks set to drag on for years
3 min
China’s real-estate crisis has dragged down the economy, caused massive layoffs and pushed multibillion-dollar companies to the point of collapse.
Economists think it is about to get worse.
Sales of newly built homes in China fell 6% last year, returning to a level not seen since 2016, according to China’s statistics bureau. Secondhand home prices in its four wealthiest cities—Beijing, Shanghai, Guangzhou and Shenzhen—declined by between 11% and 14% in December from the year before, according to the broker Centaline Property.
Developers are starting fewer projects. Homeowners are paying back their mortgages early and borrowing less. Once-thriving property companies are stuck in protracted negotiations with foreign investors, following defaults on about $125 billion of overseas bonds between 2020 and late 2023, according to figures from S&P Global Ratings.
Chinese developers and local governments are so desperate to attract home buyers that some have resorted to bizarre marketing strategies.
A property company in Tianjin ran a video advertisement featuring the slogan “buy a house, get a wife for free.” It was a play on words, using the same Chinese characters as the phrase “buy a house, and give it to your wife”—but presented in a sentence structure typically used to offer freebies for home buyers. In September, the company was fined $4,184 for the ad.
A residential compound in eastern China’s Zhejiang province promised last year to give home buyers a 10-gram gold bar.
Earlier this month, Sheng Songcheng, former head of the statistics department at the People’s Bank of China, told a local conference that the housing downturn would last another two years. He thinks new-home sales will fall more than 5% in both 2024 and 2025.
Wall Street economists are also ringing alarm bells about how long the real-estate slump will last.
“Not too many people are buying, can buy or want to buy,” said Raymond Yeung, chief China economist at ANZ. He said there had been a fundamental shift in the way Chinese people view the property sector, with housing no longer seen as a safe investment.
China’s real-estate sector and related industries once accounted for around a quarter of gross domestic product and the sector’s slump has been a significant drag on the world’s second-largest economy. That has increased calls for Beijing to do more to prop up the sector, but so far Chinese officials have stuck to piecemeal policies rather than introducing a landmark stimulus package.
A number of economists are making comparisons to Japan, which spent decades trying to rebound from a crash in real-estate and stock prices. China’s stock market is in a years-long slump.
China’s central bank can help make the situation less painful, but it will need to be aggressive, said Li-gang Liu, head of Asia Pacific economic analysis at Citi Global Wealth Investments. The central bank still has policy room and could take one big step to make a significant impact, he said.
Liu Yuan, head of property research at Centaline, said that without the government’s help, new-home prices will need to drop by another 50% from current levels before they reach a bottom. This is based on the assumption that the tipping point will only come when it is cheaper to buy than to rent houses, Liu said.
China’s real-estate downturn has claimed dozens of victims. More than 50 developers—mostly privately owned—have defaulted on their debt. Developers still have millions of unfinished homes that were sold but not delivered. Chinese authorities have set aside billions of dollars to help builders complete apartments but the logjam is growing.
The crisis has drained the coffers of some Chinese local governments, which previously relied on land sales as a main source of income. Economists estimate they have hidden debt worth anything from $400 billion to more than $800 billion. To quiet talk of potential defaults, the central government has set up debt-swap programs to help some of them refinance.
Some economists are optimistic. In the first half of this year, buyers of secondhand homes will gradually return to the new-home market and prop up the sector, said Helen Qiao, chief China economist at Bank of America. “Things will slowly get better from here,” Qiao said.
But most are still expecting more pain, and investors are bearish. A benchmark of Hong Kong-listed property stocks had fallen for four years in a row before the start of this year. Since Jan. 1, it is down another 15%.
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The new Brooklyn Tower, a mix of luxury condos and rentals, rises from the historic Dime Savings Bank building.
3 min
Listing of the Day
Location: Downtown Brooklyn, New York
Price: $16.75 million
Boasting 360-degree panoramic views across New York City, this new 92nd-floor penthouse is the highest residence in Brooklyn.
The full-floor apartment stands atop the new Brooklyn Tower, which encompasses 143 condos and 398 rentals in the heart of downtown Brooklyn, said Katie Sachsenmaier, senior sales director, Corcoran Sunshine Marketing Group.
The condos begin on the 53rd floor, and the penthouses begin on the 88th floor. This one, Penthouse 92, is the only full-floor penthouse.
“The building is coming into its own now,” she said. “It feels very busy when you step into the lobby.”
Developed by Silverstein Properties, the building at 85 Fleet Street rises from the historic Dime Savings Bank building, according to a news release.
It was designed by SHoP Architects with interiors curated by Gachot Studios, and it is the borough’s only super tall skyscraper.
Penthouse 92 features custom interiors by Brooklyn-based Susan Clark of design firm Radnor, Sachsenmaier said. “Her selections have made it really beautiful. It feels very warm and inviting.”
Architectural details include 12-foot ceilings, European white oak floors in a custom honey stain, mahogany millwork, bronze detailing and floor-to-ceiling windows.
The eat-in kitchen features Absolute Black stone countertops, an island with seating, oil-rubbed bronze Waterworks fixtures and integrated Miele appliances, according to the listing.
The primary en suite bathroom showcases large-format Honed Breccia Capraia marble. There is also a separate laundry room as well as a wet bar and a butler’s pantry.
The views are spectacular, Sachsenmaier said. “If you’re standing in the living room, you take in the Statue of Liberty and all the way up through Midtown. On a clear day, you can see the planes take off at LaGuardia (Airport).”
Moving around the apartment, you see south over the harbor and then north and east over the whole city, she said.
From the front door, “you’re immediately greeted with the expansive living room and the view,” she said. “It’s really the first thing you see.”
The primary suite features a dressing room, multiple walk-in closets, two bathrooms (one with a cedar sauna) and southwest-facing windows, Sachsenmaier said. “You get those really beautiful harbour views.
The amenities will be ready by the end of summer, she said. A Life Time club will occupy the entire sixth and seventh floors, and an outdoor pool deck wraps around the dome of the bank building.
Stats
The 5,891-square-foot home has four bedrooms, five full bathrooms and one partial bathroom.
Amenities
Residents will have access to over 100,000 square feet of exclusive indoor and outdoor leisure spaces.
Fitness company Life Time will manage an array of amenities that include a 75-foot indoor lap pool, outdoor pools, a poolside lounge and atrium, a billiards room, a library lounge, a conference room, a theatre with a wet bar, a children’s playground and playroom and limited off-site parking.
The Sky Park offers an open-air loggia with a basketball court, foosball, a playground and a dog run.
Neighbourhood Notes
Downtown Brooklyn is at the centre of a number of neighbourhoods, including Fort Greene, Cobble Hill, Boerum Hill and Brooklyn Heights. The tower has access to 13 subway lines, 11 commuter trains, the city’s ferry network and 22 Citi Bike stations.
“You can walk to Fort Greene Park in less than 10 minutes,” and Dekalb Market Hall, which has a Trader Joe’s, a Target and a food hall, is “right next door,” Sachsenmaier said.
Agent: Katie Sachsenmaier, senior sales director, Corcoran Sunshine Marketing Group
