Poly Real Estate makes benchmark bid for site in Xuhui, Shanghai
Developer snaps up downtown block with highest price at auction so far this year
Poly Real Estate Group paid the highest price for a Shanghai site this year, bidding 4.5 billion yuan (HK$5.54 billion) for a commercial-residential block in the city's centre at a municipal government auction yesterday.
The Shanghai-listed developer teamed up with its investment company to bid for the waterfront Xuhui district site.
The block attracted aggressive bidding from developers and the Poly Real Estate consortium secured it only after 99 minutes and on the 445th bid.
The price of the site is 12.5 per cent to 36 per cent higher than market expectations, which ranged between 3.3 billion and 4 billion yuan.
It is 42.9 per cent higher than the opening bid of 3.15 billion yuan.
The accommodation value - the value of a piece of land divided by the gross floor area of units permitted to be built on it - is 27,055 yuan per square metre.
The 66,530 sq metre site located in the south of Xuhui district could yield a total gross floor area of 166,325 sq metres. Under restrictions on the lease, only 45 per cent of the gross floor area can be used for residential development.
"It's not located in the core area of Xuhui district. But it is located in a new developed cultural and commercial area," said Albert Lau, the managing director of property consultant Savills China. "There was aggressive bidding for the site as there is a lack of residential sites on the waterfront available for sale.
"It also shows developers are optimistic about the market outlook."
Song Huiyong, the head of research at Centaline (China) in Shanghai, said profit on the project would be tight because prices of nearby residential properties ranged between 50,000 and 60,000 yuan per square metre.
"I think Poly Real Estate is aiming at brand building. They used to focus on mass residential projects. But this site is suitable for a luxury residential project," Song said. "It would help the developer to build a brand in the luxury market."
The authorities sold three sites yesterday, generating 6.18 billion yuan from the auctions.
Meanwhile, Yuexiu Property announced yesterday that its subsidiary bought a block in Guangzhou's Luogang district for 1.65 billion yuan, or 5,250 yuan per square metre.
The 157,152 sq metre site at Changling Road could yield a total gross floor area of 314,304 sq metres.