China property

Top 10 Chinese cities earn 1.24 trillion yuan in land sales in 2016

Nanjing overtakes Shanghai and Shenzhen to rank top in land sales, worth 177 billion yuan

PUBLISHED : Tuesday, 03 January, 2017, 7:06pm
UPDATED : Tuesday, 03 January, 2017, 8:00pm

China’s red-hot property market drove land auction prices up 30 per cent to record levels last year.

The top 10 Chinese cities earned a total 1.24 trillion yuan from land sales, a 35 per cent jump from a year ago, according to data from the China Index Academy (CIA), a private property research institute. Six cities, mostly second-tier, alone each generated more than 100 billion yuan each in sales.

Of the 300 major Chinese cities tracked for the research, 2.87 trillion yuan was recorded from land sales last year.

Nanjing, the capital of Jiangsu province near Shanghai, overtook its neighbour to become the biggest gainer, with land sales revenue surging 100 per cent to 177 billion yuan. Nationally, Shanghai ranked second, followed by Hangzhou, Suzhou and Tianjin.

Despite its second spot, however, Shanghai’s land sales actually dipped 3 per cent on year to 162 billion yuan, the lowest since 2013. Beijing slipped to seventh place, as land sale values there tumbled 57 per cent to 85.2 billion yuan.

“Developers need to replenish their land stocks amid strong sales,” said Yan Yuejin, a research director with E-house China R&D Institute.

“With prices rising too high in first-tier cities, many developers have now shifted their focus to buying land in second-tier cities.”

Shanghai has a new ‘land king’ as plot sells for 100,000 yuan per sq m — highest price ever

China’s top three property developers enjoyed combined sales of more than 1 trillion yuan in the year, helped by a number of stimulative measures rolled out by the government to encourage home-buying, the CIA data shows.

New home prices soared 12.6 per cent nationwide in November compared with a year ago, the 14th consecutive monthly growth, according to the official data.

A shortage of land has been blamed by many for pushing land prices in the bigger cities to record highs, amid fierce competition.

Fujian-based developer Ronshine China, for instance, beat 17 bidders to win a plot of land in August in central Shanghai’s Jingan district for 11 billion yuan, with the average cost hitting 100,000 yuan per square metre – the most expensive land ever sold in China. The average price of land in Shanghai last year rocketed 27 per cent to around 20,600 per square metre.

Zhang Hongwei, a research director of Tospur Real Estate Consulting, however, expects the land market to return to more realistic levels this year, given the government is stepping up its tightening policies to cool the market, “with some corrections [in home sales] likely in the first half”.

In the fourth quarter, more than 10 of the hottest cities rolled out new land auction restrictions in a bid to control surging land prices, including the setting of price caps and banning developers from borrowing to buy land.

E-house’s Yan Yuejin still thinks it highly likely the land market will continue to sizzle in more second-tier cities, as it remains increasingly hard for developers to access prime plots in first-tier cities, which could also lead to further tightening of buying rules.