Rendering of a Poly project in Beijing
Beijing’s local government seems to have lost its fear of rising housing prices as it recently allowed a project by Poly Real Estate Group to go on sale for nearly RMB 100,000 ($16,100) per square metre.
The new record price for housing in Chinese capital was only allowed to be set after the city government waived an existing ban on pricing new housing projects at over RMB 40,000 per sqm. The ban had been put in place last November to help tamp down housing prices and cut developers’ apppetite for new land.
The project by state-owned Poly is apparently not the first development to receive approval for exceeding the RMB 40,000 per square metre cap, as seven other Beijing residential schemes are said to have received a similar waiver last month, according to a report in the National Business Daily.
Capping Sales Prices to Cool Off Developers
While stories of a real estate downturn have dominated China’s business pages since the March collapse of a Ningbo developer, before that time developers were seemingly ready to pay any price for new land and appeared endlessly confident of their ability to sell ever more expensive homes, particularly in Beijing.
Beijing put the cap on home sales prices in place in an attempt to cool developers ardor for new land.
China’s capital sold off 26 plots of land during January, bringing in RMB 40.59 billion from property developers. Data from CRIC, the research wing of real estate agency E-House, indicates that the average cost of built floor space in Beijing rose 31 per cent during January (compared to January 2013) to RMB 13,400 per square metre.
Poly Real Estate Also Aggressive in the Shanghai Market
In addition to its high-end home sales in northern China’s biggest city, Poly has also been busy this year buying up land in Shanghai. In May the Guangzhou-based developer beat out several other bidders to buy a 33,007 square metre residential site in Shanghai’s Yangpu district for RMB 3.24 billion (US$522 million).
The accommodation value of RMB 39,264 ($6300) per square metre which Poly paid for its Shanghai parcel means that it most likely hopes to sell homes in the project for upwards of RMB 60,000 per square metre in an area well away from Shanghai’s downtown.
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