Measures fail to dampen interest in China sites

Big headache for the central government after developers pay 40.15b yuan for six plots of land

PUBLISHED : Friday, 06 September, 2013, 12:00am
UPDATED : Friday, 06 September, 2013, 3:39am

The mainland's market for land is heating up, with six sites in three major cities selling yesterday for record or very high prices, even though Beijing is sticking with tough measures designed to check rising property prices.

Hong Kong and mainland developers forked out a combined 40.15 billion yuan (HK$50.46 billion) yesterday for the sites in Shanghai, Hangzhou and Suzhou.

Sun Hung Kai Properties, Hong Kong's largest developer by market value, paid a record 21.77 billion yuan for a prime commercial site in Xujiahui, a shopping and entertainment precinct in Shanghai. It was the second-highest price paid for a block of land on the mainland, trailing only the former Asian Games City site in Guangzhou, which sold for 25.5 billion yuan in 2010.

In Hangzhou, Greenland, Shimao Property and Binjiang Real Estate paid a total of 13.66 billion yuan for three commercial-residential sites, 40 per cent above the minimum bids required. Two luxury residential sites in Suzhou Industrial Park went to Shimao for 4.72 billion yuan.

On Wednesday, Sunac China paid 2.1 billion yuan, or 73,000 yuan per square metre, for a residential site in Beijing, setting a record for price per square metre in the capital.

Vincent Cheung Kiu-cho, national director for Greater China at valuers Cushman & Wakefield, said the high prices paid by "land kings" could be a source of concern for the central government.

"Beijing has been reiterating the need to keep the curbs in place to stabilise home prices, and it will release more land for auction," he said.

SHKP secured the 99,188 sqmetre office-retail-hotel site - the last big plot available for sale in the heart of Shanghai - after exchanging more than 200 bids with a consortium formed by Wharf and Henderson Land Development.

In contrast to its aggressive bidding in Shanghai, the developer has spent less than HK$5 billion acquiring land in Hong Kong since October.

Cheung said the Xujiahui development, which would see SHKP tied to holding 60 per cent of the gross floor area for at least 10 years, could incur a development cost of 40 billion yuan. Citi Research expects the firm could generate 3 billion yuan in annual rental income from the project.