New | Analysts flag risks as developers bid Beijing and Shanghai building lots to record prices
Analysts express concern over excessive leverage as property developers ramp up acquisitions for new residential building sites
Developers are paying top dollar to acquire residential building sites in leading Chinese cities, with the buying wave prompting warnings from analysts of mounting risks as prices rise further into record territory.
In Beijing, land prices rose to a fresh record in October after developer China Gezhouba Group beat out seven developers at auction, paying 75,000 yuan per square metre for a plot in the city’s southwestern district of Fengtai.
That compares to recent transactions in the area during the last two months, which fetched around 50,000 yuan per square meter.
Many new apartments in the district are below 50,000 yuan per square meter, while on the upper end, the most expensive are asking around 75,000 yuan per square metre, according to property portal website Lianjia.com.
In Shanghai, land prices are also on a sharp upward trajectory. A site in the city’s northeast, 16 kilometres away from the city’s centre, sold at more than 60,000 yuan per square meter, far more expensive than comparable home prices.
“This is very risky, as developers are expecting home prices to double in the next one to two years,” said Zhang Dawei, chief analyst at Centaline Property Agency.
Beijing new home prices are up 8.1 per cent in October on year, while in Shanghai prices are up 12.7 per cent, according to the National Bureau of Statistics,