Sunac China Holdings has won a residential plot in Shanghai’s suburban Qingpu district, agreeing to pay the city government a total of RMB 3.09 billion ($430 million) for the site, according to an announcement by the Shanghai Land Exchange.
The Hong Kong-listed developer’s winning bid gives Sunac the right to build a total of 147,000 square metres (1,582,294 square feet) of housing amounting to at least 1,344 new homes.
The acquisition of the site 12 kilometres west of Shanghai’s Hongqiao airport is the latest in a series of project purchases in the Yangtze River delta region by the top five mainland developer and comes after Sunac’s chairman vowed earlier this year to take a more cautious approach toward new land buys.
Land West of Hongqiao Airport Sells for Over RMB 21k Per Square Metre of Housing
Sunac paid 0.6 percent above the auction minimum to acquire the site, labeled as Yehuang Road Southside G2-02A and G2-02B, paying the equivalent of RMB 21,013 per square metre of accommodation for the plot located about 3.5 kilometres south of the Jiasong Middle Road station on Shanghai’s metro line 17 and 2.7 kilometres north of the Sheshan station on metro line nine.
The developer’s acquisition of the 113,000 square metre plot brings with it an obligation to build to allocate at least five percent of the built area, or 7,360 square metres, for affordable housing, which upon completion must be handed over for operation by the local social housing department. Another five percent of the completed space must be developed as small to medium units of under 95 square metres in size.
The conditions of the land auction also require Sunac to retain at least 15 percent of the finished space to be made available as long-term rental housing.
Qingpu Moves Centre Stage
Previously considered to be a far-flung suburban area, Qingpu has become a central part of the Shanghai government’s masterplan for Greater Hongqiao Business Area, an 86 square kilometre community being built around the Hongqiao transportation hub, which encompasses the airport and the neighbouring high speed rail station.
In a sign that local developers are on board with the effort, Greenland Group — the largest real estate enterprise controlled by the Shanghai government — paid RMB 2.35 billion to buy out the JSWB Global Home Furnishings Center, a retail complex about five kilometres north of the new Sunac site which the developer hopes to convert into a high tech park.
According to listings on the website of real estate agency Homelink, new homes in the western Qingpu area are currently selling for an average of RMB 40,000 per square metre with second hand units trading for around RMB 37,000 per square metre. Previously owned units at Ronshine’s nearby Imperial Villa project are being made available for RMB 42,316 per square metre while China Vanke’s Magnum Opus carries an asking price of RMB 47,791 per square metre and Greenland’s Hysun is advertised at RMB 47,428 per square metre.
Sunac Adds to Project Pipeline
Sunac’s latest acquisition came two months after the developer had paid RMB 6.7 billion to acquire its site in Hongkou district as one of a set of three Yangtze River delta sites it purchased from financially troubled mainland competitor Xinhu Zhongbao. That acquisition added one million square metres (10.8 million square feet) to Sunac’s land bank.
That July buyout came three months after Sunac had agreed to pay RMB 1.16 billion to acquire two residential plots in Shanghai’s Chongming island in April.
The Hong Kong-listed developer has been ramping up its project pipeline despite its high-profile chairman Sun Hongbin having vowed earlier in the year to take a more cautious approach towards land acquisition due to what he termed an ambiguous outlook for property sales.
According to its interim report, as of 30 June, Sunac China had a land bank amounting to approximately 213 million square metres of housing which provides the Tianjin-based developer with a pipeline expected to be worth RMB 2.82 trillion. Of the company’s projects under development, more than 83 percent were located in tier one and two cities and had cost the company an average land of approximately RMB 4,307 per square metre.