The central government's attempts to cool the property market appears to be failing, with mainland and Hong Kong developers spending 16.33 billion yuan (HK$18.52 billion) on nine sites yesterday. Hot bidding for the sites, located in Beijing, Chongqing and Foshan, signals that developers remain bullish despite recent government measures to discourage excessive price appreciation. Sun Hung Kai Properties acquired a residential site in Foshan, Guangdong province, for 3.46 billion yuan. The property covers 330,000 square metres, which could provide a total gross floor area of 1.29 million square metres. That translated into 2,682 yuan per square metre. The developer, which did not join a Hong Kong land auction for two residential sites in Tai Po on Monday, is boosting its land bank on the mainland as it relies on growing demand for housing. The Foshan site is the first plot the company bought on the mainland this year. China Merchants Real Estates acquired a residential site in urban Chongqing for about 5.1 billion yuan. The 336,600 square metre site could provide a total gross floor area of 1.45 million square metres. The unit rate is 3,517 yuan per square metre. The Beijing municipal government pocketed 7.7 billion yuan from the sale of seven development sites in the city. Despite six of the sites being located in semi-urban and rural areas, developers bid aggressively. A residential site in Chaoyang district was the only one located within the Fourth Ring Road area, which marks the start of the capital's urban area. The site was sold to Yajule for 710 million yuan, 325 per cent higher than the opening bid of 167 million yuan. The site could provide a total gross floor area of 41,464 square metres, while the accommodation value is 17,123 yuan per square metre. Average property prices in the area are about 20,000 yuan per square metre. Dickson Wong Hung, deputy general manager of Centaline (China), said the accommodation values of the seven sites were similar to prices of existing housing estates there, although they were in rural areas. A site in Pinggu district acquired by local developer Tian Run was a good example of how aggressive the developers were, Wong said. The developer spent 2.005 billion yuan buying the residential site, 506 per cent higher than the opening bid of 331 million yuan. 'The average land price is 5,789 yuan per square metre, which is similar to the average property price of 7,000 yuan in the area,' he said. 'The average selling price of the project has to reach more than 10,000 yuan per square metre in order to generate reasonable profit.' Under the new measures released by Beijing two weeks ago, land buyers are required to pay a down payment of at least 50 per cent of the total price. Meggie Qin, the head of research in Beijing for Jones Lang LaSalle, said the local governments were trying to cool the property market by lowering opening bids on sites. 'That's why we saw the land prices were much higher than the opening bids,' Qin said. 'The relaxation in property loans this year has also supported developers bidding for sites aggressively.' She said the government might release more cooling measures next year, but the impact might be limited. 'Property prices in Beijing did not drop sharply in 2008 even though the government released cooling measures. It gave developers confidence.' Wong said strong competition in the mainland property market was also one of the factors encouraging aggressive land biddings. 'There are a lot of developers on the mainland, but there are fewer and fewer development sites for sale, particularly in first-tier cities,' he said. 'They can't miss the chance to acquire a site with development potential.' Hot property Developer Tian Run bought a site in Beijing for 2.005 billion yuan, which is higher than the opening bid of 331 million yuan by: 506%
