Xinyuan Real Estate Co., Ltd. (NYSE: XIN) announced last week that it had that it had committed RMB 1.29 billion ($213 billion) to acquire new land in Chengdu and Sanya. The acquisitions by the New York Stock Exchange-listed developer come as China’s rapidly rising home prices have fuelled competition for the sites needed to launch new projects.
According to an announcement from the company, it acquired a 75,038 square metre site in Chengdu’s Tianful New District for RMB 933.8 million ($153.98 million).
Xinyuan plans to develop 225,024 square metres of residential apartments on the plot, which works out to an accommodation cost to the developer of approximately RMB 4,150 per square meter. Chengdu is the capital of southwest China’s Sichuan province.
In addition to the Chengdu purchase, Xinyuan acquired a 78,831 square metre land parcel in Sanya on the island of Hainan for RMB356.9 million. The developer made the Sanya acquisition by purchasing a local privately-owned company, and plans to use the site to build 118,245 square metres of SOHO apartments for sale.
Mr. Zhang Yong, Chairman of Xinyuan, commented, “We are pleased to have increased our project under planning inventory in Chengdu, a thriving market where we have developed two projects in the past years. We are also excited to enter Hainan market, a premier vacation destination in China.
According to the company, including these two most recent purchases, Xinyuan has acquired eleven new land parcels in the past six months to be used in seven development projects.
More Competition and Higher Prices
According to China’s Ministry of Land and Resources, the average price of residential land in China rose for the seventh consecutive quarter during the period from October through December of 2013, with the average price of land for housing purposes going up 2.6 percent during the fourth quarter of 2013, to RMB 5,033 ($830) per square metre.
Higher levels of competition among developers for land has meant record price levels being seen at land auctions across China. In December, Greenland Group set a new high price level for land in Shanghai when it acquired a downtown residential site for RMB 5.95 billion (US$979 million).