Shanghai sold a pair of residential sites for a total of RMB 6.2 billion today as China Vanke and China Merchants Shekou swooped on the new projects in the city’s Qingpu District.
The set of transaction pave the way for the creation of nearly 187,000 square metres of homes in the suburban Shanghai district, but also demonstrate the dwindling interest in new sites, even in China’s most prosperous city
Both of the plots sold for the auction reserve price and each land sale attracted only one bidder, after the city already cancelled four planned site sales in the last month.
Vanke Pays RMB 33K Per Square Metre for Latest Qingpu Site
China Vanke purchased Qingpu District plot 33-01 for the auction reserve price of RMB 2.95 billion ($436 million) according to Shanghai government records. The 49,500 square metre (533,000 square foot) site is approved for construction of 89,000 square metres of finished homes, which works out to a unit price of RMB 33,160 per square metre.
Like the site purchased by China Merchants Shekou, Vanke’s new plot is located close to the company’s Unicity project in Qingpu, where homes have been selling for an average of RMB 58,000 to 59,000 per square metre during the first six months of this year.
The site, which is approved for construction of 1,263 homes, is located close to the East Xujing station on metro line two, just west of the Hongqiao transportation hub.
China Merchants Picks Up Qingpu Site at Reserve Price
Qingpu district site 27-04 was picked up by Guangdong-based developer China Merchants Shekou for RMB 3.25 billion, which was also the reserve price for the 33,190 square metre parcel.
Approved for construction of 1389 homes covering 97,900 square metres, in what could be a strange coincidence, China Merchants’s new purchase works out to around RMB 33,190 per square metre of built space – nearly the same price as Vanke’s acquisition.
According to the planning requirements, both projects need to include at least 15 percent long-term rental housing, along with a portion of affordable housing.
Restrictions Hit Demand for Land in Shanghai
The pair of successful site auctions come after the Shanghai city government had cancelled four land sales worth a total of more than RMB 5.41 billion during the past month as restrictions on the country’s real estate market dampen developer demand for new sites.
Mainland authorities have tightened credit conditions and upped enforcement of home purchase restrictions this year in a bid to cool down the real estate market, and the result has been that growth in real estate investment for the year to date slowed by 0.5 percent in June to 9.7 percent. The figure was down from the 10.2 percent growth recorded in the period through the end of May, according to the latest figures from the National Bureau of Statistics.