Chinese hospital outbids Vanke to secure most expensive land in Shanxi’s capital city

PUBLISHED : Thursday, 25 August, 2016, 6:45pm
UPDATED : Thursday, 25 August, 2016, 11:33pm

In a rare move, a hospital backed by the local government outbid property giant China Vanke to buy the most expensive residential land ever sold in Taiyuan, the capital of Shanxi province.

Shanxi Provincial People’s Hospital, the biggest medical centre in the province, agreed to pay 440 million yuan for a site in central Taiyuan, close to the hospital, setting a record for the city. The average floor price works out at 8,075 yuan per square metre.

China’s largest developer Vanke bid for six rounds during the public auction on Wednesday but failed to win the plot.

Analysts said the site would likely be used for housing for the hospital staff.

Cooperative housing, a traditional form of welfare housing for civil servants and state-owned enterprise employees in China since the 1950s, was still common in Taiyuan, said Chen Sheng, dean of the China Real Estate Data Academy.

In the past, land for welfare housing was allocated by the government.

Government land transfer is becoming more and more market-oriented.
Chen Sheng, China Real Estate Data Academy

“Nowadays municipal governments are pushing these enterprises, including hospitals and schools, to acquire land through the public market,” Chen said. “Government land transfer is becoming more and more market-oriented.”

Home price growth in Taiyuan, the northern city five hours’ drive from Beijing, has been weak in the past few years. The average price for new homes is about 7,000 yuan per square metre.

Zhang Dawei, chief analyst at real estate agency Centaline Property, said the recent heated land bidding in Taiyuan showed developers were expecting a market rebound in the city amid the central government’s stimulative home policies.

Still, Zhang said it was rare for a hospital to compete for land with developers.

“Usually the city governments will discourage other developers and set strict development requirements to help their preferred buyers to win the site,” Zhang said, citing the land for the future site of Universal Studios Beijing that was sold last month to only one bidder.

Public bodies therefore were unlikely to emerge as big competitors to developers in land acquisitions, he said.