China’s largest city, Shanghai, concluded its first land auction this year with the sale of all 19 plots on offer for 51.9 billion yuan (US$7.5 billion), up seven per cent from their estimated value, signaling keen interest from major developers and suggesting a strong step towards recovery for the country’s property market.
The four-day land sale, saw more than 50 property developers engaged in intense bidding that resulted in 15 plots selling higher than their floor price. One parcel on offer went through 55 rounds of bidding, while another lot was contested by as many as 28 bidders.
Both state-owned and state-backed developers secured 14 out of the 19 lots up for bids. Poly Developments, a subsidiary of state-owned China Poly Group, emerged as the auction’s biggest winner, obtaining three parcels for 13.2 billion yuan, according to data from Chinese real estate consultancy CRIC.
It was followed by Vanke, which secured two lots for 11.3 billion yuan, and China Railway Construction Corp, with two parcels that cost 9.9 billion yuan. One parcel in Shanghai’s suburban Minhang district attracted as many as 28 bidders. China Enterprise won the bid by paying 2 billion yuan, which was 8.5 per cent more than the floor price or 48,029 yuan per square metre.
Vanke and China Railway jointly won a lot in Minhang for 7.5 billion yuan, which was nine per cent higher than the floor price, after fending off competition from eight other developers in 55 rounds of bidding– the climax of the four-day land auction. This residential parcel was the priciest among all the lots on offer.
Other successful bidders, including Xiamen C&D, China Resources Land, Longfor Properties and Yuexiu Property, managed to replenish their land banks in Shanghai after the auction. While the results of the Shanghai government’s land auction appeared encouraging, the greater number of state-owned and state-backed developers that took part in the bidding showed that there is still a way to go before the country overcomes its property crisis.
Despite the recent easing of the financing policy for developers, only a limited number of these enterprises have benefited amid the prevailing liquidity pressure in the industry.
