Sales volumes in China's land market are on the rise, with the re-emergence of "land kings" in key cities.
"Land sales in China have been hot and in the last few weeks we have been hearing of high-profile land acquisitions by developers across the country, or the emergence of new land kings, especially in tier-one and tier-two cities," said Alan Jin, an analyst at Mizuho Securities.
"Land kings" refers to a term for land transactions at record prices. Bigger and smaller players are entering the fray, added Jin.
Among the deals done by newly-emerging "land kings" last month was the 1.87 billion yuan (HK$2.3 billion) purchase on May 6 by mid-sized developer Kaisa Group of a land parcel in the Baiyun district with an average accommodation value of 25,597 yuan per square metre (excluding the construction of the social housing portion) - a record in the area.
Two weeks later, on May 23, Kaisa acquired another land parcel for 799 million yuan in the Baiyun district of Guangzhou.
And on May 17 it won a land parcel with an accommodation value of 7,068 yuan per sq metre after 112 rounds of bidding at an auction in the Yuhang district of Hanghzou for 1.01 billion yuan. Its winning bid was 86.5 per cent over the reserve price.
Also making headlines in May was major developer Evergrande Real Estate Group, which acquired four land parcels in Chongqing for a total cost of 5.05 billion yuan on May 27.
Driven by the surging demand, land prices in tier-one cities surged by 25 per cent month on month and 328 per cent year on year in May, according to research institution, China Real Estate Information Corporation, a wholly-owned subsidiary of E-House (China) Holdings.
In the first 24 days of last month, land sales in tier-one cities were already nearly 16 per cent higher than the entire month of April, said another data provider, China Real Estate Index System.
The aggressive land acquisition reflects developers' optimism about the market over the next several years.
It is also driven by improved cash positions due to robust sales and decreasing inventory, especially in tier-one and some tier-two cities, according to Jin.
But investment bank Jefferies warned in a newly-released research report: "We have reservations on the hot land market as the 'land kings' may trigger policy concerns.
The report said the aggressive bidding was underpinned by easier financing, positive sentiment on presale and scarce prime land sites. "Overly aggressive land banking will jeopardise developers' cash flow and profitability," it added.