• Wed
  • Oct 22, 2014
  • Updated: 5:22am
BusinessChina Business
PROPERTY

Land sales surge amid strategy shift in China

Developers keen to top up land banks as they move their focus away from the smaller cities

PUBLISHED : Friday, 12 July, 2013, 12:00am
UPDATED : Friday, 12 July, 2013, 4:48am

The value of land sales in major mainland cities increased sharply in the first half of the year as developers replenished land banks after a rebound in property sales since the end of last year.

Figures from China Real Estate Information Corporation, a mainland data provider and website operator, show Hangzhou's local government generated 60.13 billion yuan (HK$75.5 billion) from land sales over the past six months, 477 per cent more than the 10.42 billion yuan taken in the first half of last year.

Property sales on the mainland have been strong since the end of last year. Many developers have completed financing early this year, offering them sufficient capital to replenish land banks
Du Jinsong, research analyst at Credit Suisse

In Guangzhou, the total value of land sales increased by 384 per cent to 37.64 billion yuan from a year ago, while Beijing's land sales value surged 358 per cent to 66.42 billion yuan.

Shanghai generated 74.23 billion yuan from land sales, 297 per cent more than that in the previous year. The value of Shenzhen's land sales jumped 274 per cent to 11.16 billion yuan.

"Property sales on the mainland have been strong since the end of last year. Many developers have completed financing early this year, offering them sufficient capital to replenish land banks," said Du Jinsong, a research analyst at Credit Suisse.

"Most of the developers are also shifting their acquisition targets from sites in second-tier cities to first-tier cities," the analyst said. "They are optimistic about the market outlook of first-tier cities as property sales in first-tier cities are stable. But property sales in second level and small cities were weak in 2012."

Local governments released more sites for sale in the first half. Hangzhou government sold 30 sites in the past six months, compared with only 19 in the previous year. Shanghai released 55 sites, compared with 44 sites a year ago.

Dickson Wong Hung, chief executive at Centaline (China) for northern and southwest China, said land sales were one of the major income sources for local governments.

"Local governments have heavy debt, particularly second-tier and third-tier cities. They have to build a lot of infrastructure," Wong said,

He believes land supply would stay at high levels in the second half.

Despite the government's cooling measures and increasing land supply, Wong said land prices continued to rise in major cities.

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