More ground could be broken in Beijing soon after three land sales this week.
China’s real estate market may still be stuck in an eight-month long slide but China’s real estate developers still are eager to buy more land – at least in China’s largest cities. So eager that they are willing to pay a record RMB 8.625 billion ($1.39 billion) to acquire it.
The new “land-king” in this case is a consortium of developers led by state-linked China Resources Land, which paid the record high price for an unusually large site in Beijing’s central Fengtai district at an auction on Wednesday.
The China Resources-led group paid a 22 percent premium over the opening price of RMB 7.07 billion for the 155,675.9 square metre (1.675 million square foot) site.
Zoned for a total build-able area of 418,693 square metres, the buyers paid an estimated RMB 20.599 per finished square metre for the site, making it still well below the record price per build-able square metre for land in China’s capital.
Tianjin-based Sunac set that record in September 2013 when it bid RMB 4.3 billion for a residential site in Beijing that would yield just 59,152 square metres of build-able space – a price of nearly RMB 73,000 per square metre that has yet to be surpassed.
Beijing Land Still in Demand
China Resources’ gamble on Beijing land seems to be a risk that other developers are also willing to make after another consortium led by Hong Kong’s Wharf and China Merchants Property bought two sites in the same neighborhood on Monday of this week.
The consortium, which also included investors from Shenzhen and Beijing, paid RMB 4.2 billion ($676 million) for one site and RMB 4.49 billion ($722 million) for the second site to beat out 20 other bids from 10 other developers.
Together the two sites add up to 117,226 square metres and would yield a gross floor area of 338,172 square metres, according to an account in the South China Morning Post.
Shanghai also saw major land sales reappear in late December when two land sales in China’s biggest city both featured prices for build-able space in excess of RMB 60,000 per square metre.
The burst of big transactions in Beijing and Shanghai may indicate that, while the overall property market news is discouraging, developers remain confident of their ability to market housing in China’s first-tier cities.
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