China’s biggest developers accelerate land acquisitions as market cools
The premiums being paid for parcels of land have fallen dramatically, with new regulations effectively barring smaller developers from bidding
Some of China’s leading developers are quickly snapping up plots of land at knock-down prices after new cooling measures effectively blocked their smaller competitors from bidding.
Under new policies introduced in October in several mainland cities, developers are barred from bidding for land using borrowed money. They now have to rely entirely on their own cash to buy land, which gives cash-rich property giants a distinct advantage over most small players.
The result has been a dramatic fall in the premiums being paid for plots of land in large cities, with less developers able to join the bidding wars. The new regulation is particularly strict in Shanghai.
In 2017’s first public land auction in Shanghai last Thursday, Country Garden acquired an 89,200 square metre plot in Baoshan, on the outskirts of the city, for 16,400 yuan per sq m, a mere 3.17 per cent premium over the starting price.
In the same auction - which only attracted four bidders - Shimao Property paid a 57.3 per cent premium for a parcel of land in the same area.
These figures are a far cry from just seven months ago, when Cinda Real Estate shocked the market by paying a 303 per cent premium for a plot, also in Baoshan. Public records show that during June and August, several developers bid for parcels of land there, and none of them paid less than a 100 per cent premium.