Select Language:
Several state-owned enterprises controlled by local governments in China have started purchasing large quantities of foreclosed properties at significantly discounted prices as falling prices and declining sales in the country’s judicial auction housing market put additional strain on local real estate sectors.
In Guangzhou’s Nansha district, a municipal operation company acquired more than 60 apartments out of 88 that were recently auctioned in a residential development. The purchase prices ranged from approximately 6,657 yuan (about $956) to 7,629 yuan ($1,096) per square meter, far below the neighborhood’s typical asking prices of 10,000 to 30,000 yuan ($1,436 to $4,317) per square meter for pre-owned homes.
Meanwhile, a government-owned company in Huzhou, southeastern Zhejiang Province, bought 37 properties in Haikou, located in southern Hainan Province, at an auction last September. The properties were sold at the reserve price of 9,286 yuan ($1,333) per square meter, well below the developer’s reported average selling price of around 33,000 yuan ($4,752) per square meter for new homes in the area.
A real estate investment manager from a large state-owned enterprise commented that foreclosed properties are frequently valued well below their market worth, providing state capital with a low-cost avenue for acquiring quality assets. He added that government-backed firms purchasing properties at auction could help alleviate downward pressure on home prices, serving as a stabilizing force as the market deleverages and addresses risks.
The ultimate effect of state-owned enterprises buying bulk amounts of foreclosed units depends on how they handle these assets afterward. Whether they repurpose them as subsidized housing to support low-income populations, attract talent, or release the properties into the market in concentrated batches will influence the broader impact on the housing sector.
Last year, around 719,000 properties were listed on China’s judicial auction platform, marking a 6.6 percent decrease from the previous year, according to the China Index Academy. Of these, roughly 169,000 units were sold, a decline of 4.4 percent. The total transaction value was approximately 253.6 billion yuan ($36.4 billion), down by 23.6 percent. The average discount on auctioned homes was 74.1 percent, meaning buyers typically paid around 74 percent of each property’s assessed value.
ChatGPT
Perplexity
Gemini AI
Grok AI
