Future Land plans flats at 120,000 yuan per square metre at new site in Shanghai’s Hongkou
Exclusive district’s current most expensive project selling at 98,000 yuan per sq m
Chinese homebuilder Future Land Development plans to sell units at a new apartment project in Shanghai’s Hongkou district at 120,000 yuan per square metre next year, becoming the most expensive housing in the area.
The price would represent a more than 20 per cent surge on current selling prices in the district.
Future Land won the residential plot for an average land price of 76,000 yuan per square metre last month, setting a new record for the city.
“There is no doubt the selling price will reach 120,000 yuan per square metre,” chairman Wang Zhenhua said at the company’s interim results briefing on Monday.
He said it plans to start construction on the project this year and launch pre-sale within 2017.
The current most expensive project in Hongkou district is selling at 98,000 yuan per square metre.
Wang said the cost for the so-called “land king” was not expensive, given selling prices of similar projects nearby are beyond what he paid for the land.
Kenny Chan, Future Land’s executive director and vice president, added the company will “continue to seek prime land in top cities, but its priority is to speed up turnover for current projects to avoid risk”.
Chu Tongxin, a property analyst at Shenzhen Anji Asset management, said the risk involved in the project is “small as the plot is not big and new supply in Shanghai’s core area will only become less and less”.
To curb a potential property asset bubble, China’s Securities Regulatory Commission issued a new ruling last week that said real estate companies should only raise capital for construction, instead of buying land.
Wang said, however, he does not think the new policy will affect the sector much as developers could purchase land by money raised from property sales.
He added housing policies are likely to remain stable in the second half.
“If the economy continues to slow, the government won’t crack down on real estate.”
For the company’s own fundraising for expensive land, Chan said it could find partners to jointly develop projects in future.
The company saw its core profit jump 121 per cent year on year to 306 million yuan during the period. Revenue was 9.30 billion yuan, up 5.7 per cent.
Average selling prices increased 15.5 per cent to 10,366 yuan per square metre.
The company recorded contracted sales of 28.05 billion yuan in the first half and it has raised its annual sales target value by 30 per cent to 52 billion yuan from 40 billion yuan.
It was the first appearance by the chairman in Hong Kong since he returned to the company in February after being investigated by the Chinese authorities earlier this year for “personal reasons”.
Future Land’s share price in Hong Kong closed at HK$1.17 on Monday, 1.7 per cent down on Friday. The shares have risen 5.41 per cent over last three months, in line with the Hang Seng Index’s rise of 5.16 per cent over the same period, but they are still lagging two of its main rivals.
CIFI Holdings has seen its share price rise 11.7 per cent in the period, while Yuzhou Properties has climbed 8.9 per cent during the past quarter.