Despite sliding real estate prices in recent months and widespread reports of a property bubble, several of the country’s real estate developers showed their ongoing optimism on Friday by bidding up the price of a land plot in Shanghai.
State-owned Poly Real Estate finally snatched up the 33,007 square metre residential site in Shanghai’s Yangpu district for RMB 3.24 billion (US$522 million) according to an account in the Shanghai Daily, but only after fending off hours of competing bids from rival developers.
Among the other companies competing for the plot situated between Tongbei Road, Huimin Road, Liaoyang Road and Huoshan Road, (about half of an hour’s commute from the centre city by car) were Hong Kong’s Wharf Holdings, a joint-venture between Sunac China and Xiamen-based C&D Real Estate, and Beijing Gem Real Estate.
The final price paid for the site works out to an accommodation value of RMB 39,264 ($6300) per square metre, which means that Poly most likely hopes to sell homes on the site for upwards of RMB 60,000 per square metre.
The final sale price was a 36.8 percent premium over the auction’s starting price of RMB 2.37 billion.
Land Buys Sliding Nationwide
The competition for the Shanghai site seems to be an anomaly among the country’s overall land market, which has seen demand, and transactions slide this year.
According to data provided by real estate agency Centaline Property there has been nearly a 78 percent downturn in land expenditures by the top 20 real estate developers from January through April this year, as local governments have held back land, and developers have becoming increasingly concerned about risks.
However, the relative scarcity of pure residential sites within Shanghai’s ring road helped to drive demand for this particular plot.
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