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Sandy Li

Mainland developer warns of property bubble
China Vanke, the mainland's largest listed developer,  warns that record high prices in recent land auctions  pose risk to the economy as they may  drive up home prices further.
'Land value [in some cities] has exceeded prevailing transaction prices [for homes],' chairman Wang Shi said without  naming the cities.
As land prices soared in major cities such as Beijing and Shanghai, local and foreign developers alike, including those from Hong Kong, are increasingly drawn to second-tier cities such as Chengdu, Chongqing, Hangzhou and Changsha for land acquisitions.
On Tuesday, Beijing-based Sino-Ocean Land outbid Wheelock Properties at an auction for two adjoining sites at Hangzhou's Gongshu district,  offering 2.2 billion yuan or 15,588 yuan per square metre for the lots.
The price was about 85.5 per cent higher than the opening bid of 1.2 billion yuan and 55 per cent above the 10,000 yuan per square metre  price for transactions in the area.
Mr Wang said a bubble had formed in the mainland property market but declined to predict when it would burst. 'I'm not a fortune teller,' he said.
Mr Wang said  Shenzhen-listed  Vanke, which has expanded  into 28 cities such as Shenzhen, Shanghai, Beijing and Tianjin, would stay out of aggressive bids even if it had built up a  10 billion yuan war chest.
Last year, Vanke bought about 60 per cent of   its new sites  by acquiring existing property firms, with the rest coming from government land auctions, he said.
The company could  pay for sites it acquired through takeovers at a 15 per cent discount to market value which could 'greatly reduce' risks, Mr Wang said.
Vanke would not hold up its land bank  to bet on rising land value, he said.  It has a land bank of 18 million square metres  which would be sufficient for two years of development.
The land bank estimate excluded this year's flat completions  amounting to seven million square metres, Mr Wang said.
Next year's completion target was 10 million square metres, up 30 per cent from this year, he said  at a ceremony in Hong Kong to launch the company's new corporate identity.
Vanke's A shares rose to as much as a 52-week high of 40.78 yuan before closing at 39.50 yuan,  a 1.46 per cent increase from a day earlier. The stock has jumped 285 per cent over the past 12 months.
Mr Wang said the company had no immediate plans to list in Hong Kong.
'Hong Kong is a good platform to raise funds. In the mainland, it takes 10 to 12 months to complete  fund-raising activities but it takes only  about one week in Hong Kong,' he said.
Bankable future
Vanke's land bank for two years of development totals, in square metres: 18m



Record land prices pose risk, says Vanke