Big developers to benefit from successful land auction
Developers with large land banks, particularly in commercial sites in Shanghai, will be the main beneficiaries of last week's land sale, analysts say.
'The big winners would include Shimao Property Holdings, Kerry Properties, China Resources Land and Hang Lung Properties,' said Clifford Lam, an analyst at Credit Suisse.
'We used to be more optimistic on the outlook of residential projects in the mainland and seldom mentioned commercial properties,' Mr Lam said. 'But the better than expected land auction result shows more investors and developers are entering the commercial property market.'
The influx of capital indicated the value of commercial properties would have significant growth in future, he added.
Developers with extensive exposure in the city's commercial sector would now have their valuations revised upwards, analysts said.
Look for reratings, they said, of Kerry which had a land bank of 3.33 million square feet in Shanghai, 45 per cent and 13 per cent of which were for office and commercial uses, respectively.
Hang Lung owns two commercial projects in Shanghai with a gross floor area of 320,922 square metres, while China Resources Land has projects with a gross floor area of two million sqft being built in Shanghai.
Shimao Property's Shanghai land bank holds gross floor area of 1.2 million sqmetres, with the developer also looking to increase its investment in commercial properties.
Analysts expect Sun Hung Kai Properties and Shui On Group would also benefit as SHKP has 6.7 million sqft being built in Shanghai, including the four million sqft Shanghai IFC project and a 2.7 million sqft Huai Hai Zhong Road commercial project.
