By staff reporter Gong Jing

Chinese property developer Hengda Real Estate Group has slashed its new apartment prices in Nanjing by up to 35 percent, stirring a storm in what had been a peaceful property market in this capital of Jiangsu Province.

Industry experts are now debating the impact of the price cut on the city’s real estate market, which has yet to see the weakened demand for residential property reported in many other Chinese cities since last year.

Song Jian, director of the Nanjing Suding Real Estate Research Institute, called the price reduction a short-term measure by Hengda to raise capital. He said it won’t have a long term impact on the area property market.

But many industry insiders think the move will lead to a real estate price war in Nanjing.

The cost of a new apartment at Hengda’s Oasis Garden fell September 5 to between 4,600 yuan and 5,000 yuan per square meter, down from the 7,400 yuan price registered with the local government’s price control office. Prices at another Hengda project in Nanjing -- Jinbitianxia International Garden – also were reduced.

Hengda’s latest offer is so low that it even undercuts pre-owned home sellers, who currently fetch about 5,500 yuan per square meter.

The Oasis Garden complex is 20 kilometers south of downtown in an area where infrastructure is still under development but which has attracted several major developers including a key Hengda rival, Vanke.

Vanke officials are now discussing whether to cut their prices following Hengda’s move, a sales staffer at the company’s Jinyulanwan development in Nanjing told Caijing. But the source also said prices would not fall to Oasis Garden levels.

Although the Jinyulanwan project registered prices of 7,500 yuan per square meter with the government, Caijing learned that the market had speculated final prices to surpass 8,000 yuan. Sales were expected to start next month.

Housing prices in Nanjing have remained stable this year despite a nationwide slump in property sales. Only since last month have prices in the city started to fall, but slowly, after Vanke cut prices at several projects.

Hengda entered the Nanjing market late last year by buying the plot for Oasis Garden from Nanjing Handian Property Development Co. Ltd. for an undisclosed price, which insiders said was quite high.

Sales at Oasis Garden were supposed to start at the end of September, with an initial opening of about 400 flats. Caijing learned from a sales staffer that VIP customers paying 3,000 yuan up front can get special prices – a pitch that’s attracted more than 100 buyers so far.

1 yuan = 14 U.S. cents