Land prices continue to increase
May 30, 2016 Category Real estate, Weekly
Land prices in the biggest Chinese cities continue to skyrocket, with 118 sites sold at huge premiums so far this year, new data show. By May 19, 118 land parcels had been sold at steep premiums in the 22 top cities tracked by the China Real Estate Information Corp (CREIC). Developers paid a more than 100% premium for nearly 60 of them, while the premium reached 400% for some. Mid- and small-sized developers were the most aggressive in their bids, CREIC said. As competition intensifies and the industry consolidates, smaller real estate firms have no alternative but to expand faster to avoid being knocked out of the market, it said. Land prices have also jumped in first- and second-tier cities in the past year as new players have swarmed in to take advantage of a market divergence in which property prices in bigger cities have shot up while oversupply plagues smaller cities. In April, the municipal government of Suzhou sold 13 sites for CNY25 billion. The two-day land auction saw the emergence of several new “land kings”, or high-priced plots, as they are called in China. Mid-sized developer Jingrui Holdings purchased a plot in Gaoxin district at CNY19,699 a square meter, even more expensive than the district’s current average selling price for new flats. There could be some speculative investment as developers are betting on a steady rise in home prices, said David Hong, Research Director at CREIC. “It would very hard to make profit out of ‘land kings’ as the market is expected to enter a period of adjustment in the second half,” said Tospur Research Director Zhang Hongwei. The apartments built on such premium land target high-end customers, many of whom have been shut out of the market as a result of the recent cooling measures, the South China Morning Post reports.
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