Beijing’s city government took in RMB 9.81 billion on the last day of October by selling a trio of land parcels, including two sites in the capital’s coveted Chaoyang district, according to an announcement from the State Information Center.
Local governments are boosting land sales in the fourth quarter as they race to reach revenue targets
The three properties were awarded to four winning bidders from among China’s firmament of state-owned developers, with the two projects in Chaoyang district requiring multiple rounds of bidding before a single joint-venture buyer emerged victorious.
Of the three sites, the two in Chaoyang district were acquired by a joint venture between Chinese state-owned developers Beijing Capital Development Holding and Gemdale Corporation for a total of RMB 4.98 billion. The third site, in Shijing Shan district was snapped up by a joint venture between Hong Kong-listed China Overseas Land and Investment and state-owned Shougang Group for RMB 4.83 billion.
All three of the projects sold were in locations far from the capital’s core districts as restrictions on sales of pricey homes and tightening credit have combined to shut down sales of the most expensive sites in China’s largest urban centres.
Gemdale-Beijing Capital Take Chaoyang Sites
The pair of Chaoyang parcels were marked as 2909-0603 and 2909-0604, and are located adjacent to each other on the north side of the North Fifth Ring road, close to the Beijing-Chengde Highway and metro Line 14 Shangezhuang Station.
Beijing Capital Development boss Pan Liqun
Both sites are designated for residential development, with a public use component, and required by the local government to sell the completed homes at an average of not more than RMB 78,148 per square meter, with a maximum unit price of RMB 82,055 per square meter.
The 19,200 square meter 2909-0603 site is approved for construction of up to 57,603 square meters of housing. Beijing Capital Development and Gemdale jointly fought through 16 rounds of bidding from players including Seazen Group, China Merchants Property Development Co. Ltd, China Jinmao and Radiance Property Holding before eventually winning the tender at a price of RMB 2.34 billion — a premium of 17 percent over the auction minimum.
The 22,975 square meters 2909-0604 site can yield up to 68,925 square meters, and inspired 27 rounds of bidding before Beijing Capital Development and Gemdale again won out with a RMB 2.64 billion bid. The winning offer was at a premium of 27 percent over the auction’s starting price.
Suburban District Pulls in Just One Bid
The joint venture between China Overseas Land & Investment and Shougang Group made the only offer for the third site, winning the 61,127 square metre site for the auction minimum of RMB 4.83 billion. Located near the West Fifth Ring Road and the Gucheng station on metro line one in west Beijing’s Shijing Shan district, the site aggregates a number of plots, labelled as 1612-806, 813, 819, 820, into a project approved for construction of up to 152,820 square meters.
The 1612-819 and 820 pair of plots are designated for government-subsidized housing, with the completed units to be sold at an average of not more than RMB 40,100 per square meter. The other pair of parcels, 1612-806 and 813, are slated for condo developments which are to be sold at an average price of no more than RMB 58,802 per square meter and a maximum of RMB 61,742 per square meter.
Public documents from the Beijing Land Reserve Center show that the city has increased its land supply in the fourth quarter of the year. Between October 22 and 23, Beijing listed a total of 14 parcels. Earlier in September, Beijing Municipal Commission for City Planning and Land Resources Management had said that it plans to roll out 66 more land sites in the coming months.
Centaline research analyst Zhang Dawei told the local media that it’s unsurprising that cities are putting more land up for sale in the fourth quarter as some of local governments are still facing financial shortfalls due to inadequate land sales revenue. As of September 2018, failed residential land auctions across the Chinese cities increased 148 percent year on year, according to Centaline’s data.
In July, Shanghai cancelled four planned land sales worth a total of more than RMB 5.41 billion ($796.4 million) in less than a month, as tighter credit conditions were making it more difficult for developers to purchase sites. Last week, a RMB 7 billion, 138,600 square meter mixed-use trophy site in Wuhan failed to fetch a buyer at a local government auction.
Leave a Reply