Alibaba’s U.S. IPO helps drive real estate market at home

29 Sep

Alibaba’s IPO in New York helped make many employees rich overnight and is now helping to drive Hangzhou’s luxury homes market.

Real estate signs targeting Alibaba employees can be seen from central Hangzhou to West Lake in the west of Hangzhou, where Alibaba is based, with one advertising slogan saying “For Alibaba staff that helps change the world.” Some luxury villa developers also attempted to cash in on the Alibaba executives who live there, targeting buyers who want to live next to Alibaba’s 18 founders. 

Before the Alibaba IPO, property transaction volume and prices in the first quarter of 2014 were down 37.8 percent compared to the same period in 2013. Properties on the market, on the other hand, rose 36.2 percent year-on-year. The real estate market seemed quiet, even after the government relaxed home purchase restrictions.

Around 50 percent of Alibaba employees, or 10,000 people, own company shares. After the New York debut, the average worth of shares per employee rose to around US$4.22 million (25.8 million RMB). Alibaba founder and CEO Ma Yun also publicly declared that he will continue to live in Hangzhou and that he does not have plans to relocate or emigrate.

Currently, there are more than 1,000 homes priced over 10 million RMB in Hangzhou, 50 percent of which cost more than 15 million RMB. There are apparently more millionaires in Alibaba than the luxury houses available for sale. The phenomenon sent developers putting up signs and giving out flyers advertising new properties, resulting in the sale of 10 more luxury houses in the area than the same period in 2013, outshining rivals in the west of Hangzhou.

In addition to the real estate market, many industries also managed to create a link between their products and Alibaba. For instance, an English language institution promoted the importance of English proficiency in New York Stock Exchange. A car dealer showcased cars with stickers of Alibaba’s sign. Stationary sellers were asking around if Aliababa has plans to expand its office.

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