Chinese property firms bank on VR to beat virus

Mass lockdowns in China following the coronavirus outbreak have left property sales in the country facing a full-year decline for the first time in five years. (AP)
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Updated 15 February 2020

Chinese property firms bank on VR to beat virus

  • Developers hope virtual reality salesrooms and livestreams can end market slump as potential buyers refuse to leave their homes

HONG KONG: China’s property developers and realtors are turning to virtual reality salesrooms and livestream marketing to thaw a frozen market as the coronavirus epidemic keeps physical offices shut and potential buyers are afraid to leave their homes.

A female employee of Sunac China introduced a residential development in the southern city of Qingyuan on social media platforms Tiktok and Weibo wearing a white gown and waving a paper fan.

The livestream on Tuesday attracted a total of 510,000 viewers for Sunac, China’s fourth-largest developer by sales, but it was unclear whether any of them bid for the property.

Twenty of the top 100 developers have done livestream sales since the virus outbreak, property researcher CRIC said, adding that 92 of them run online sales platforms which some recently revamped in response to the virus.

Property sales by floor area in China fell 0.1 percent in 2019, marking the first full-year decline in five years, and analysts expect sales may drop again this year due to the epidemic.

The outbreak has led to several cities being locked down, mass quarantines and work and travel disruptions as Beijing works to contain the flu-like virus which has killed 1,380 people and sickened more than 60,000.

Major realtors including Centaline are also doing more live forums online, hosting talks with senior executives on the property market.

Trying to make homebuyers more comfortable in buying online, Centaline plans to work with property developers to build virtual salesrooms for their new developments.

“The online sales platform has been around for a while, but it was mostly for advertising and chats between agents and buyers,” said Centaline Shenzhen General Manager Alan Cheng.

“Now because homebuyers are not able to go out and see the flats themselves, we will focus on providing more real live videos to engage with them.”

He said the firm this week introduced online contracts that involve third-party authentication technology in two cities, one of the first in the industry, so that buyers can sign the documents without leaving home.

Efforts are being made offline as well.

China Evergrande, the third-largest developer by sales, announced on Thursday that homebuyers are entitled to a lowest-price guarantee until May 10, where the company will refund buyers the difference if prices drop.

Sunac, depending on the city, allows its customers to forfeit the purchase free of charge within up to 60 days.

Despite the industry’s creative efforts, the market has all but ground to a halt.

Centaline’s Cheng said the few transactions now appeared mostly in the rental market or when sellers were willing to slash prices. 


Oil-rich wealth funds seen shedding up to $225 billion in stocks

Updated 30 March 2020

Oil-rich wealth funds seen shedding up to $225 billion in stocks

  • Risking more losses is not an option for some funds from oil-producing nations

LONDON: Sovereign wealth funds from oil-producing countries mainly in the Middle East and Africa are on course to dump up to $225 billion in equities, a senior banker estimates, as plummeting oil prices and the coronavirus pandemic hit state finances.

The rapid spread of the virus has ravaged the global economy, sending markets into a tailspin and costing both oil and non-oil based sovereign wealth funds around $1 trillion in equity losses, according to JPMorgan strategist Nikolaos Panigirtzoglou.

His estimates are based on data from sovereign wealth funds and figures from the Sovereign Wealth Fund Institute, a research group.

Sticking with equity investments and risking more losses is not an option for some funds from oil-producing nations. Their governments are facing a financial double-whammy — falling revenues due to the spiraling oil price and rocketing spending as administrations rush out emergency budgets.

Around $100-$150 billion in stocks have likely been offloaded by oil-producer sovereign wealth funds, excluding Norway’s fund, in recent weeks, Panigirtzoglou said, and a further $50-$75 billion will likely be sold in the coming months.

“It makes sense for sovereign funds to frontload their selling, as you don’t want to be selling your assets at a later stage when it is more likely to have distressed valuations,” he said.

Most oil-based funds are required to keep substantial cash-buffers in place in case a collapse in oil prices triggers a request from the government for funding.

A source at an oil-based sovereign fund said it had been gradually raising its liquidity position since oil prices began drifting lower from their most recent peak above $70 a barrel in October 2018.

In addition to the cash reserves, additional liquidity was typically drawn firstly from short-term money market instruments like treasury bills and then from passively invested equity as a last resort, the source said.

It’s generally a similar trend for other funds.

“Our investor flows broadly show more resilience than market pricing would suggest,” said Elliot Hentov, head of policy research at State Street Global Advisers. “There has been a shift toward cash since the crisis started, but it’s not a panic move but rather gradual.”

The sovereign fund source said the fund had made adjustments to its actively managed equity investments due to the market rout, both to stem losses and position for the recovery, when it comes.

Exactly how much sovereign wealth funds invest and with whom remain undisclosed. Many don’t even report the value of the assets they manage.

On Thursday, the Norwegian sovereign wealth fund said it had lost $124 billion so far this year as equity markets sunk but its outgoing CEO Yngve Slyngstad said it would, at some point, start buying stocks to get its portfolio back to its target equity allocation of 70 percent from 65 percent currently.

Slyngstad also said that any fiscal spending by the government this year would be financed by selling bonds in its portfolio.