Scalpers profit from 'life-changing apartments' pre-sale
Despite the staggering 25-million-yuan (US$3.57 million) starting price for one apartment as well as a 5-million-yuan purchasing deposit, more than 700 potential buyers queued up in the heat and made offers on 105 properties at Shanghai's Oriental Bay apartment complex in Xuhui District.
Tags on social media sites that read "life-changing apartments," "apartments make you sleep-to-earn 20 million yuan," "No. 1 financial product" became instant hot clicks.
The ready-for-sale apartments and townhouses at Oriental Bay got their pre-sale license on May 10, the property developers said in a notice.
Potential buyers queue at the Oriental Bay.
Shanghai Donghang Real Estate Co Ltd has received a pre-sale permit for 105 housing units in the Oriental Bay Yunzhu project at 377 Longqi Road.
With the entry price lower than that of second-hand properties, potential buyers saw the possibility of a good return on investment.
Apartment buildings of Oriental Bay's Phase II project
The news portal thepaper.cn reported that the average price of Phase 1 apartments at Oriental Bay was 65,000 yuan per square meter in 2013. Phase 2 opened in 2019 at 106,000 yuan per sqm, while Phase 3 is now available for purchase at 165,000 yuan per sqm.
It's worth noting that the transaction price of Phase 2 has already topped 200,000 yuan per sqm. The huge price difference between Phase 3 and second-hand residences is one of the key reasons that the apartments have piqued the interest of many buyers.
According to the data provided by real estate broker KE Holdings Inc, there is currently only one listed property in Phase 2 of the Oriental Bay Dongfang project, known as "Oriental Bay Jinyuan." The property is 433.39 sqm in size, with a unit price of 226,125 yuan, and a listing price of 98 million yuan.
Transaction data records on the KE platform show that a 410-sqm property is sold for 241,464 yuan per sqm for a total price of 99 million yuan in April this year.
Security staff at the sales department of Oriental Bay.
A 240-sqm apartment in Phase 3 is priced at just over 1.2 million yuan, according to a real estate agent. The salesperson claimed that buyers stand to profit up to 20 million yuan by selling the property later.
Some buyers complained about the hurdles in their efforts to buy a property. They said that an online appointment has to be made, followed by verification of documents, before even making the trip to the sales office.
A buyer surnamed Shi confirmed that the buying process for a unit at Oriental Bay was difficult. In addition to regular documentation, the buyer must provide property evaluation certificates for all family members, including spouses and minor children. Furthermore, the buyer must provide bank statements for the last 12 months.
"The 12-month bank statements have resulted in the elimination of some scalpers who hold properties on behalf of others," Shi claimed. "Funds that travel through intermediaries are not recognized. The bank statements must demonstrate that the income belongs to the individual or family and is sufficient to meet the purchase price of the property."
Various scalpers jump in
Despite the real estate developer's stringent requirements, irregularities exist, with "marriage scalpers," "funds scalpers," and "property holding scalpers."
According to Shi , the subscription price for first-time home buyers is 14 million yuan, which includes the frozen deposit certificate, and the fee for second-time home buyers totals 34 million yuan. It is in this context that "fund scalpers" come into play.
"Marriage scalpers" help purchasers in need of partners.
"For example, if a single buyer has money but does not meet the purchase qualifications, they can become eligible for a pre-sale by marrying a high-scoring person to meet the home-buying criteria," a source explained. "They pay a fee to their marriage partner after a successful transaction."
Potential risks
Buyers of units at Oriental Bay have reportedly complained to the authorities that scalpers are attempting to profit from the real estate holdings.
According to China's Marriage Law, if a property is purchased after a marriage license is issued, it is deemed post-marital property, which falls within the category of marital property, according to Shanghai real estate lawyer Guo Ren.
In the case of a marriage arranged by scalpers, there could be serious consequences in the future.
"If the scalper refuses to divorce you or refuses to assign ownership of the property to you, there is a possibility that the property will be recognized as marital property, and the scalper may have a claim to a share of the property," Guo explained.
