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October 27, 2011

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Developer besieged over cuts

ABOUT 200 homeowners yesterday besieged a property developer's offices, angry that prices have been slashed by 30 percent since they bought their homes.

Residents in Qiuxiafang, a project developed by Shanghai-based Greenland Group in Jiading New Town, demanded that their deals be cancelled.

"We require a refund because the loss we are suffering now is too great for us to afford," said a homeowner, surnamed Wang.

"Of course, for breach of contract, we are willing to take some default punishment."

Wang bought an apartment at Qiuxiafang last December for around 17,000 yuan (US$2,673) per square meter. But the homeowner recently learned that Greenland Group is now offering a price of 11,600 yuan per square meter in an effort to boost sales.

In the past week, homeowners have visited the Qiuxiafang sales office eight times demanding their money back - without success.

Ten police officers were present yesterday, though to date protests there have been peaceful.

A lawyer representing the Greenland Group, surnamed Tang, said yesterday that the developer would negotiate with homeowners individually.

"In principle, we believe both sides should respect the sales contracts. Homeowners who don't get their demands met after negotiations can seek arbitration or help from the court," he said.

It is almost impossible for homeowners to get refunds since their demands are not backed by the law, but industry analysts say developers drastically cutting prices risk damaging their image.

"While it is both legitimate and understandable for developers to take such an approach as they are facing ever-tightening credit and reduced cash flow, this strategy reflects negatively on their image," said Lu Qilin, a researcher with Shanghai Deovolente Realty Co.

"On the other hand, while homeowners may deserve our sympathy, their demands are legally groundless."

Similar clashes between real estate developers and homeowners have occurred at several residential projects across the city in recent days, with frustrations sometimes leading to violence.

Last weekend in Pudong, homeowners trashed the sales office of Coastal Palace, one of China Overseas Property (Group) Co's developments. They were angry that prices had been cut by 20 percent.

Less than 300,000 square meters of new homes, excluding affordable housing, were sold in the city in the first 23 days of October, a drop of nearly 73 percent from same period last year, according to Shanghai Uwin Real Estate Information Services co.


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