In an effort to curb the city’s rising home prices, Beijing wants to increase housing supply – and developers participating in a recent land auction showed their willingness to contribute to the program by snapping up more than a billion dollars worth of residential land in China’s capital city in a single day.
Last week the Beijing Municipal Bureau of Land and Resources auctioned off a trio of plots in Chaoyang, Daxing, and Mentougou districts totalling more than 156,000 square meters, and by the end of the day had secured more than RMB 8.09 billion ($1.17 billion) for the city’s coffers, according to an account on mainland property website Guandian.cn.
Selling Off Sites in Chaoyang, Daxing and Mentougou Districts
A site in the city’s Chaoyang district, which is home to 60 percent of Beijing’s foreign-invested enterprises and all of its embassies, attracted nine developers competing for a 60,400 square metre plot approved for development of 102,600 square metres of space.
Despite being located outside the city’s Fifth Ring Road, the site in Chaoyang’s Guanzhuang area attracted 55 rounds of bidding from developers including China Overseas Property Holdings, R&F Properties, and China Vanke before Beijing Urban Construction Group made the winning RMB 3.26 billion ($472 billion) offer. The state-owned builder’s purchase works out to RMB 31,773 per square metre of built space.
The largest of the plots in Yinghai town, in southern Beijing’s Daxing District, sold for RMB 3.8 billion ($551 million) to Guorui Properties. At a total construction floor area of 63,000 square meters, the Hong Kong-listed home builder’s successful bid worked out to RMB 30,135 per square meter of floor area.
The smallest of the three plots, located beyond the reach of Beijing’s subway network in Mentougou district’s Yongdingzhen area, sold to China Railway Construction for RMB 1.03 billion ($149 million) – more than 33 percent above the auction’s reserve price. The central government owned firm is paying the equivalent of RMB 17,882 per square metre of floor space after being beat out eight other bidders, including China Poly Property, CIFI Holdings and Country Garden.
Beijing Boosts Land Supply Amid Housing Affordability Concerns
The land auction came just a few weeks after the Beijing municipal government announced that it would increase land supply over the next five years to cool residential property prices. According to a statement from the city authorities in early April, from 2017 to 2021, Beijing plans to build up to 1.5 million housing units on land parcels covering a combined 60 million square meters.
Following a spate of housing restrictions that quickly spread around the country, Beijing’s announcement stated that 70 percent of the total land allocated for residential building would be in northern and southern suburban areas.
Shanghai, Guangzhou and Shenzhen seem to be on a similar track to increase land supply with land sales in China’s first tier cities up by 50 percent from the same period a year ago, according to data from the China Urban Land Price Dynamic Monitor as cited by Xinhua.