Bids from Shimao and China Overseas lower than expected
The mainland's tightened credit policies continue to help cashed-up developers, with Hong Kong-listed Shimao Property Holdings and China Overseas Land & Investment yesterday winning two mega sites in Hangzhou for a less than expected price.
Shimao bought a residential-commercial site with a gross floor area of 610,000 square metres with the opening bid of 3.07 billion yuan, or 5,046 yuan per square metre.
At the same auction, China Overseas Land outbid its only rival to win a nearby site for 1.58 billion yuan, or 5,630 per square metre. The price tag was 11.5 per cent higher than the opening bid of 1.42 billion yuan.
Beijing's policy of restricting credit to the overheated real estate market is providing more opportunities for cash-rich developers who do not have to rely on bank loans or other financing to buy property. From September last year, developers were required to fully pay for land before construction could begin.
Previously, payments could be made in instalments according to the property's development stage.
'The prices for the two sites were below market expectations,' said Henry Wong Yuet-yiu, general manager of Centaline (China) Property's Hangzhou branch. He said the sites were expected to fetch bids of more than 6,000 yuan per square metre.