Guangzhou land tender reveals effects of curbs

PUBLISHED : Friday, 01 September, 2006, 12:00am
UPDATED : Friday, 01 September, 2006, 12:00am

Developers losing appetite as two of six sites on offer draw only one bid each

Two out of six plots of land on sale in Guangzhou could attract only one bid each when tenders closed yesterday, suggesting government austerity measures to cool the property market have curbed developers' appetite for acquisitions.

The sale was Guangzhou's first since the central government in May ordered banks to tighten lending and raise interest rates.

Property developments would continue to feel the impact of regulatory measures, a Macquarie Research report said.

'Investors need to be selective in order to best leverage on China's growth potential,' the report said.

Of the sites on sale, commercial plot A3-1 at Pearl River New Town in Tianhe, the city's new central business district, attracted a single bid of 148.66 million yuan from Guangzhou R&F Properties.

The site can produce a total gross floor area of 62,460 square metres when eventually developed.

A residential site with a building area of 38,450 square metres in the old district of Laiwan drew a bid of 51.27 million yuan from Guangzhou Cigarette Trading.

The other two commercial sites - B1-5 and B1-6 - at Pearl River New Town generated two to four bids, including one from R&F Properties, Guangzhou's biggest developer.

According to sources, R&F Properties won the B1-6 site against three other bids with an offer of 288 million yuan, slightly above the reserve price of 281.92 million yuan. The site can generate a total gross floor area of 118,453 square metres.

Landy Luk, assistant to the chairman, confirmed R&F Properties had bid for three sites.

'We have not received the result from the government yet,' he said.

R&F Properties said when announcing its half-year results that it had acquired 11 plots of land with a gross floor area of about 3.02 million square metres this year.

Of the 11 sites, four are in Pearl River New Town and can produce a combined gross floor area of 457,000 square metres. The remaining sites are in Beijing, Tianjin and Chongqing.

Sources said a residential site at Haizhu district went to Poly Real Estate Group, the largest state-owned property developer, for about 150 million yuan.

The tender document says that the Haizhu site is designated for flats of less than 90 square metres to cater for the mass market.