Shanghai developer CIFI’s over 370 million yuan land bid deposit forfeited by government
Rare punishment for breach of rules at the bidding stage is seen as harsh by analysts, as authorities increase regulation of overheated property market
In a rare move, the Shanghai city authorities have withheld land security deposits worth up to 374 million yuan from a major developer, citing irregularities, amid the government clamp down on property speculation to cool the overheated market.
Shanghai-based CIFI Holdings – one of the country’s top 20 Chinese developers by sales – said on Tuesday that the Shanghai Land Transaction Affairs Center decided not to return its security deposit because it didn’t attend the official scheduled tender submission, despite applying for the land use rights for the plots of state-owned construction land in the west of the city.
It was told by the authorities the move constituted a “breach of conditions”.
CIFI argued the forfeit was “without justification” and said it is “considering initiating an appeal to the relevant authorities”, according to a company statement to the Hong Kong stock exchange. CIFI’s Hong Kong shares dropped 1.3 per cent Tuesday, closing at HK$2.20.
“Rules have been less strict before,” CIFI Holdings chief financial officer Albert Yau told the Post, without giving further comment, as the company’s legal advisors entered the fray.
The Chinese government has introduced a raft of new measures since September in an effort to curb and regulate the red-hot property market, including raising home buyers’ down payment requirements, halting the granting of presale permits to some developers, and suspending developers’ domestic bond issuance.