Shanghai scraps land sales worth US$1.5 billion in 20 days as developers lose mood to shop amid tightened controls and glut
In Shanghai, the biggest commercial city, five land sales worth nearly US$1.5b have been cancelled in 20 days
Shanghai has cancelled five planned land sales worth a total of 10 billion yuan (US$1.47 billion) in 20 days, underscoring dampened appetite of developers weighed on by tightened funding and tepid sales.
The latest abandoned bidding for a prime site in Yangpu district to sell from a starting price of 4.6 billion yuan, brought cancelled land auctions this month to five, according to an announcement on the Shanghai Land Market website on Monday. It did not give reasons for the cancellation, but said no party had put forward a price by July 20.
The Yangpu site is within the city’s inner ring road and is slated solely for residential development, compared with the four previously cancelled sales where the sites were in the suburbs and two of them were for commercial use.
Yang Hongxu, vice director of E-house China R&D Institute, said the steep asking price, translated to 66,000 yuan per square meter, deterred developers. Surrounding projects sold at 100,000 yuan per sq m, meaning if developers sold the project at a similar price, the gains would be minimal, he said.
Chinese developers are facing a liquidity squeeze and rising funding costs as a result of government’s deleveraging campaign and efforts to rein in housing prices.
“The cancellation is probably due to the unattractive bidding prices that developers intended to make,” said Alan Jin, property analyst with Mizuho Securities.
“The developers are suffering a rough time facing the price cap and tightening credit. It dose not make sense for them to bid high.”