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The Shenzhen government is auctioning five residential sites on Monday. Photo: Roy Issa

Shenzhen sells five plots at record prices in biggest land tender since 2001 as investors vie for foothold in Greater Bay Area’s tech hub

  • Logan Property Holdings paid 6.6 billion yuan for the most expensive plot in the Shenzhen tender, while China Overseas Land paid 5.7 billion yuan for the second-costliest plot
  • The combined area of the five plots add up to 170,273 square metres (1.8 million square feet), slightly smaller than Victoria Park in Hong Kong
Shenzhen

Shenzhen’s government has sold five residential land parcels at record prices, exceeding its minimum bids by 45 per cent, as more than 80 developers from mainland China and Hong Kong jostled for plots

in the technology hub at the centre of the Greater Bay Area megaproject.

The land plots, with a combined area of 170,273 square metres (1.8 million square feet) – slightly smaller than Victoria Park in Hong Kong - sold for a combined 22.38 billion yuan (US$3.2 billion), a record single-day haul for the city government.

Logan Property Holdings paid 6.6 billion yuan for the most expensive plot of land measuring 32,667 square metres, while the Guangzhou city government’s investment arm Yuexiu Property Company paid 5.9 billion yuan for the second-costliest parcel.

The auction is a test of developers’ financial resolve as they bolster their positions in the Greater Bay Area (GBA), which combines 11 southern Chinese cities including Hong Kong into a megapolis with US$1.5 trillion in combined economic output. International capital has poured into real estate in Guangzhou and Shenzhen, two of the most important mainland Chinese cities in the GBA, with 7.5 billion yuan of investments in the first quarter of 2019, topping the 5.2 billion yuan seen in the whole of last year by nearly half, according to data by Cushman & Wakefield.

“Shenzhen occupies the throne [of mainland China’s portion of the Greater Bay Area] and is the hottest city, so every developer is sparing no effort to secure a piece of the action,” said Li Yujia, senior economist with the Real Estate Assessment and Development Research Centre. “No one wants to miss the chance as fewer and fewer land in Shenzhen can be offered for sale on the open market for buildings homes.”

The Shenzhen government has set a premium on the tender, ranging from 30 per cent to 45 per cent for each land plot. The minium bids start from 1.39 billion yuan for the smallest plot, going up to 4.54 billion yuan for the largest plot.

Outside View around the 9 Square shopping centre at Longhua district in Shenzhen. Photo: Alamy

Major contenders for these sites include Poly Development, China Overseas Land & Investment, China Resources Land and Ping An Real Estate. Smaller developers like China Merchants Shekou Industrial Zone Holdings, China Vanke, Kaisa Group and Logan Property Holdings are also in the fray.

China Overseas Land, listed in Hong Kong, beat out competitors with a winning bid of 5.4 billion yuan for the third plot. A unit of Ping An Insurance Group’s venture capital arm paid 2.47 billion yuan for the fourth plot while PowerChina Real Estate Group paid 2 billion yuan for the smallest parcel.

Hongkong Land and Wharf Properties, two of the city’s biggest developers, also took part in the tender but left empty-handed.

“It is really rare to see so many developers in an auction,” said Li, noting that developers know that only 40 per cent of the city’s land supply between 2018-2035 has been earmarked for private development.

This is also Shenzhen’s first residential land sale in 2019. Last year, only 11 parcels of residential land were auctioned with six being sold to a local government-affiliated developer that plans to build homes only for rent. The city government, which owns all land and sells their usage rights to developers, did not release any residential plots for sale in 2017.

Among the five plots earmarked for sale, a 32,666 sq metre site in Longhua district is expected to fetch the highest opening bid of 4.54 billion yuan, or 44,000 yuan per sq metre, with the cap set at 5.9 billion yuan.

This article appeared in the South China Morning Post print edition as: Record Shenzhen land sale as funds pour into tech hub
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