Developers regaining taste for land sales
Slowly rising proceeds from recent tenders on the mainland point to local governments releasing more sites in the next few months
Property developers on the mainland are gradually recovering their appetite for acquiring development sites, but improved prices fetched at recent land tenders have yet to ease the financial woes of local governments that depend on land sales as a major source of their revenue.
Taking advantage of the recovering demand for land, local authorities on the mainland are therefore expected to speed up the release of sites to bolster their coffers over the next few months, analysts says.
Bidding for land at government tenders, especially for sites designated for residential use, started picking up in June and in July the total proceeds from all land sales in 300 mainland cities amounted to 147.49 billion yuan (HK$180.34 billion). That was up 2 per cent on the June total and the highest monthly sum since the beginning of the year, according to the China Index Academy, the research arm of the operator of the mainland's biggest property website, Soufun Holdings.
Sites zoned for residential use generated 97.37 billion yuan, up 23 per cent month-on-month, according to the China Index report released earlier this month.
Revenue from land sales is collected by local governments that sell the land and income from land sales is estimated to contribute as much as 60 per cent of local government revenue. In Hong Kong a similar picture has emerged of a steadily growing appetite for land among local developers. A survey conducted by Hong Kong-based agent Centaline Property Agency showed that land earmarked for the development of up to four million square metres of residential floor area was sold in July, against two million square metres in June.
On the mainland, a total of 274 sites was sold during July, down from 301 sites in the previous month, according to online research service provider China Real Estate Information Corp.