Gemdale Corp has taken the title of China’s new ‘land king’ as the developer outbid more than 20 rivals to pay RMB 8.8 billion ($1.3 billion) for a 140,252 square-meter parcel of land in Shanghai last week.
The Shanghai-listed company’s winning bid for the site in Pudong’s Zhuqiao area was a 286 percent premium over the minimum asking price at a city land auction and set the record for the largest sum paid for a building plot in the city so far this year.
The Pudong deal was one of three land plots purchased by the Shenzhen-based developer this year, although it was company’s first acquisition in a first-tier city, according to an account in the South China Morning Post.
Gemdale’s record deal represents the latest peak in a multi-billion dollar land rush this year that saw land sales in Shanghai reach RMB 50.6 billion ($7.5 billion) during from January through the ednd of June. During that period, half of the parcels sold fetched premiums double the auction minimum.
Gemdale Joins Poly and COFCO in Betting on Pudong Locations
State-owned Poly Real Estate paid RMB 5.45 billion ($834 million) for a 69,433-square-meter site in the outlying town of Zhoupu in May. And in June Beijing-based COFCO transacted a similar purchase to Gemdale outbidding 20 rivals for a parcel of land in Pudong at a 235 percent premium.
Though the Zhuqiao site shows promise, including speculation of the planned East Shanghai railway station’s potential location in the area and its designation as an aviation-business related hub, the site currently lacks metro access.
As in other recent land deals, Gemdale will be required to set aside five percent of homes built for affordable housing and 15 percent for the rental market.
The price paid for the land translates into about RMB 33,000 per square meter, though under the restrictions, the actual price per square meter is closer to RMB 41,500. Analysts have said the developer must charge a price of at least RMB 60,000 to achieve a standard profit despite homes adjacent to the plot currently selling for RMB 25,000 per square meter.