
Two of the four sites pulled from the auction schedule were in Shanghai’s Baoshan district
Shanghai has cancelled four planned land sales worth a total of more than RMB 5.41 billion ($796.4 million) in less than a month, as restrictions on the country’s real estate market dampen developer demand for new sites.
No reason was given for the cancellation of the site auctions, which included a pair of residential projects, along with two more commercial plots, however, analysts believe that tighter credit condition are making it more difficult for developers to purchase sites, at the same time that stricter enforcement of home purchase restrictions are cutting the growth rate of new home sales.
According to the figures issued by the National Bureau of Statistics on July 19, China’s growth in real estate investment for the year to date slowed by 0.5 percent in June to 9.7 percent — down from the 10.2 percent growth recorded in the period through the end of May.
Tighter Market Conditions Dampen Developer Demand

Savills’ Jame Macdonald believes that tighter credit and stricter sales conditions may be scaring off developers
Among the abandoned auctions were planned sales of two sites in the suburban district of Baoshan worth a total of RMB 2.65 billion ($390 million), according to announcements on the Shanghai Land Market website. The first of the two Baoshan sites had been slated for a tender at a minimum price of RMB 2.63 billion for the 56,974 square metre site, while the 2,004 square metre commercial site carried an auction minimum of RMB 12.03 million. The commercial project specified a plot ratio of 1.2, while the residential project’s plot ratio was 1.6
In emailed comments to Mingtiandi, James Macdonald, Head of China Research at property consultancy Savills said that the cancellations are likely due to a number of factors, including generally tighter financing conditions on the mainland.
Macdonald also cited “stricter vetting of the bidder and their source of capital” as potentially keeping smaller and highly leveraged developers away from auctions, as well as growing concerns among developers over market prospects, “given sustained restrictions on sales and higher financing costs for home purchasers.”
Suburban Projects Go Unwanted
The other projects cancelled included a 39,754 square metre residential site in the city’s western-most district of Qingpu, which was taken off the list of planned auctions on July 13th after having carried an auction minimum of RMB 1.50 billion ($221.9 million).
The fourth planned project to be pulled was a 63,548 square metre commercial site along Shanghai Metro Line 8 in suburban Minhang District, which had carried a minimum bid of RMB 1.26 billion before the sale was cancelled on July 17th.
Speaking to mainland website, The Paper.cn, Yan Yuejin, a research director with property agency E-House said developers’ lukewarm responses to the planned auctions showed that they had adopted a more rational approach, which, he added, might have resulted in the government’s termination of the land sales in Shanghai.
Government Crackdown in Full Swing
The government’s bid to cool down the property market began late last year when real estate buyers in over 50 major cities across China were hit by higher mortgage down payments on top of increased interest rates, as well as price intervention by central authorities.
Still more restrictions came after President Xi Jinping’s delivery of China’s new five-year plan during last year’s 19th Party congress, in which he said houses were “not for speculation”.
More recently officials from the Ministry of Housing and Urban-Rural Development began conducting inspections across major cities from July 1st targeting housing speculation, unlicensed real estate agents, fraudulent information as well as fake or illegal payments.
The crackdown is scheduled to last until the end of this year.
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