Update | Shenzhen attracts 8 developers to bid for top site
“The price is a record high, but still within expectation given the prime location,” said Liu Wenchun, a senior researcher at consultancy Worldunion
Shenzhen attracted eight top developers to bid for an urban redevelopment site on Friday for 888 million yuan (HK$1.1 billion), showing strong demand despite it being the epicentre of troubles besieging Kaisa Group.
What is unique about this auction is the government has preset the aggregate price as well as retail space, parking lots, amenity facilities and 144,051 square metres to house original residents, leaving participants to bid down the residential area saleable to the general public.
In most of China’s land auctions, parcels go to developers who offer the highest price. In recent years, a rising number of cities have been trying other criteria to determine winners in order to keep a lid on housing inflation.
“The Kaisa crisis will not deter developers from acquiring land in Shenzhen, even in redevelopment projects,” said Wang Fei, a senior analyst at property consultancy Centaline’s research centre in Shenzhen. “But they will be careful about their dealings with local officials.”
Kaisa was a top local developer active in city redevelopment, but its Shenzhen City Plaza redevelopment and a few other projects were banned from sale two months ago due to its suspected links to disgraced senior officials, sending shockwaves across the whole industry as China’s anti-corruption crackdown widened.
China Overseas Land & Investment, the mainland’s largest developer in terms of market capitalisation, beat rivals including China Vanke, Gemdale, China Merchants Property and Excellence Group. During hot bids, the saleable residential floor space was reduced to 39,900 square metres from 90,486 square metres, which pushed up the cost per square metre to about 40,000 yuan.