Land buying in China’s first-tier cities could drag them out of property downturn soon
“We expect land price in all tier-1 cities would continue to grow, very likely at a faster pace than last year” - Mizuho Securities
A spate of positive news and early signs of stabilisation of property sales have stirred up a land acquisition spree in first-tier cities of China where developers believe they will crawl out of the market downturn soon.
A large residential site in the southern part of Beijing sold for 8.63 billion yuan (HK$10.96 billion), setting a record for the most expensive plot in terms of total amount on Wednesday. The winning developer is a consortium comprised of China Resources and the Ping An insurance group.
The sale came two days after Wharf consortium paid 8.6 billion yuan for two adjoining sites in the same area.
“Land acquisition appetite is certainly higher in first-tier cities where land supply is limited,” said Alan Jin, an analyst at Mizuho Securities.
He noted land price in tier-1 cites were up even in 2014.
“We expect land price in all tier-1 cities would continue to grow, very likely at a faster pace than last year,” he said. Average land prices in first-tier cities, according to BNP Paribas, saw a year-on-year 56 per cent increase to 11,708 yuan per square metre last year, compared to just six per cent growth in ‘bad cities’ – like Sanya in Hainan- which is facing a glut in supply.