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Shanghai, Beijing auctions draw poor response from developers

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Land put up for auction by the Shanghai and Beijing municipal governments has either been withdrawn or generated poor response as developers tightened their purses amid the global credit crunch.

Shanghai has withdrawn three sites from auction as they failed to draw any bids, while three out 10 sites being offered for sale by the Beijing government attracted only one bid each.

To attract interest, the Suzhou municipal government did not set floor prices for 24 plots of land recently released for auction.

Michelle Sze, the head of investor relations at Singapore-listed Yanlord Land Group, said developers were exercising extreme caution in land acquisitions in the face of volatile global financial markets coupled with slackening housing demand.

'Cash is king now. It is hard to draw interest from developers unless they have exhausted their land reserve,' Ms Sze said.

It was important to improve the cash-flow position at a time of growing uncertainties worldwide, she added.

Yanlord paid 2.6 billion yuan (HK$2.95 billion) for two sites in Shanghai and Tianjin this year. 'Our land reserve will be sufficient for development for the next five years,' Ms Sze said.

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