China Vanke Adds Shanghai Site to Bring 3-Week Land Buy Total in City to Nearly $1.9B

In less than three weeks time, China’s third biggest real estate developer in terms of sales made three land purchases in Shanghai, spending more than RMB 12.8 billion ($1.87 billion) on site acquisitions in China’s most prosperous city.

The latest pick-up by China Vanke, according to an announcement by the Shanghai government on Tuesday, is a 71,160 square metre (766,000 square foot) residential site in Shanghai’s suburban Minhang district, which the developer acquired that same day for the auction reserve price of RMB 2.71 billion.

Tuesday’s land buy comes just one week after the company spent RMB 9.8 billion on a mixed-use site in the city’s Xuhui district last Wednesday, and just over two weeks after Vanke purchased a 49,500-square-metre plot in Shanghai’s Qingpu district for RMB 2.95 billion on July 23rd.

Vanke Pays RMB 21K Per Square Metre for Minhang Site

The Shenzhen-based developer purchased Minhang District plot 08A-03Aa for the auction reserve price of RMB 2.73 billion, according to Shanghai government records, with the company once again being the sole bidder for the project, as was the case for its Qingpu acquisition in July.

The 71,160 square metre site is approved for construction of 128,800 square metres of finished homes, which works out to a unit price of RMB 21,225 per square metre. Home prices in the area around Vanke’s new project averaged RMB 47,470 per square metre in July according to data from mainland real estate website Fang.com.

The site, which is approved for construction of at least 1,022 homes, is located in Wujing town, to the east of East China Normal University’s Minhang Campus, between Tonghai Road, Zihong Road, and Longwu Road.

According to the terms of the land sale, the developer is required to build at least seven percent of the total residential area of the project as public housing and at least 60 percent of the residential space, around 77,300 square metres, must be devoted to small and medium-sized homes.

Beijing Capital Land Also Buys in Minhang

On the same day that Vanke made its latest Shanghai purchase, rival developer Beijing Capital Land bought the second of two Minhang sites offered for sale by the government.

Like Vanke, the developer, which ranked 58th nationally in terms of contracted sales in the first half of 2018, was the only bidder for its parcel, picking up the 18,049 square metre residential plot #08-05 for RMB 1.01 billion. Approved for construction of 324 homes over 32,500 square metres of gross floor area, Beijing Capital’s new purchase works out to around RMB 31,115 per square metre of built space or about 46.5 percent higher than Vanke’s acquisition in terms of per square metre of GFA.

Beijing Capital’s acquisition carries similar land use requirements to Vanke’s with at least seven percent of the built area to be devoted to affordable housing and 60 percent of the space to be used for construction of small and medium-sized homes, the land sale documents show.

Vanke Bought 33 Real Estate Projects Last Month

Including its July 23rd site acquisition in Shanghai’s Qingpu district, Vanke added 33 new real estate projects to its mainland China pipeline last month, committing a total of RMB 25.43 billion to expanding its land bank in the country.

According to a July financial statement announced to the Hong Kong stock exchange by the company on August 5, Vanke’s 33 real estate projects add up to a total of over 4.3 million square metres of new floor area for the developer in more than 20 cities, including Wuxi, Hangzhou, Taiyuan, Urumqi, Dongguan, Zhongshan, Quanzhou, Ningbo, Nanjing, Jiaxing, Wenzhou, Jinan, Tangshan and Xuzhou.

The burst of July deals continues a land acquisition trend that Vanke has been pursuing since the beginning of this year. The July report shows that the company has spent RMB 96.6 billion on 160 new real estate projects during the first seven months of the year.