In a significant sign of growing confidence among China’s real estate developers, Vanke and six other developers combined to purchase several parcels of land for more than RMB 8.87 billion between September 5th and 7th. The purchases were made in a number of unrelated transactions in first and second tier cities in China.
China Vanke Co Ltd, the nation’s biggest developer in terms of market capitalisation, paid RMB 4.67 billion for two plots of land in Guangzhou and Hefei on September 5th and 6th. This total was RMB 1 billion more than the company had spent purchasing land during the month of August.
In addition to Vanke’s two plots, China Resources Land Ltd purchased RMB 2 billion of sites during the same three days.
The surge in transactions is seen as both a response by developers to a recent upward trend in transactions and prices following government stimulus measures, and as a result of increasing pressure on local governments to sell off land for much needed revenue.
Interviewed in a story on the land purchases in the China Daily, Chang Qing, an analyst at Homelink, a Beijing-based real estate consultancy, said, “As the revenues from selling land declined, due to the stringent government measures, local governments are now more willing to launch quality land parcels into the market.”
For developers there is also more reason to be confident that land they buy now can be developed profitably following the recent residential real estate recovery. The country’s real estate development index, a key barometer of the country’s property market, saw a small rebound in August after sliding 14 months in a row, according to the National Bureau of Statistics.