China’s rebounding real estate market continues to drive up land prices, as a subsidiary of Singapore’s Wing Tai group recently set a new record by paying RMB 42,821 (US$7,028) per square metre of planned space for a plot near Xintiandi.
The final price paid at last week’s auction of the 8,594 square metre lot was RMB 1.1 billion (US$180.6 million), a premium of 47 percent over the starting price of RMB 748 million.
According to a report in the Shanghai Daily, Winmine Investment Pte, Ltd, a wholly owned vehicle of Singapore-listed Wing Tai beat out Xiamen-based China SCE Property Holdings and privately held local company Shanghai Yongye Enterprise Group in the bidding.
New Price Records Set Monthly
November was the third month in a row that a new price record was recorded in China’s “super cities” of Shanghai and Beijing, as the real estate market has accelerated rapidly during the second half of 2013.
The consideration paid by Winmine breaks the previous record set by Hong Kong-based developer K. Wah Group during October this year when it paid RMB 40,106 per square metre for a 5,665 square metre riverfront residential site in Pudong.
The existing record for a commercial site in Shanghai had been the RMB 37,264 per square metre that Hong Kong developer Sun Hung Kai had set in September when it bought a plot in Xujiahui.
However, the prices paid in Shanghai still lag far behind the RMB 73,000 per square metre that Sunac paid for in September for a residential site in northeast Beijing.
Land Prices Rising Despite Increase in Supply
Shanghai’s home sales have rebounded sharply in recent months the volume of space sold increasing as much as 60 percent year on year, and prices showing a 14 percent rise from October 2012 to October 2013, according to a report by Shanghai Uwin Real Estate Information.
The flood of demand, coupled with government policies designed to drive the creation of more housing supply are encouraging developers to bid up land prices.
Shanghai land sales for 2013 are expected to total more than RMB 200 billion, compared to only RMB 87.58 billion in 2012, when land revenues dropped to a three year low.
With the government still holding back introducing meaningful restrictions on the market, the announcement of the next land price record may not be long arriving.