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Two land parcels on sale for residential leasing only

SHANGHAI'S land authority has launched two parcels designated solely for residential leasing, the first of its kind ever released in the city to developers as local government started to tap new options to address accommodation needs of those who find home prices unaffordable high.

Starting price for the larger piece, located in Zhangjiang, Pudong New Area, and covering a site area of 65,007 square meters, stood at 723.9 million yuan (US$106.3 million), or a gross floor area price of 5,568 yuan per square meter, according to a statement posted last night on the city's official land website.

The other piece, a 28,513-square-meter plot in outlying Jiading District, has been set with a starting price of 424.2 million yuan, or a gross floor area price of 5,950 yuan per square meter.

Developers are required to hold these two developments for 70 years and would not be allowed to sell any units, the land watchdog said.

"The Zhangjiang plot seems no surprise as a municipal blueprint on Zhangjiang Science City released in May has made it very clear that all new residential units built in the area in the future should be rental properties," said Lu Wenxi, senior manager of research at Shanghai Centaline Property Consultants Co. "As for the Jiading parcel, I believe that it should reflect local government's hope to attract more young talents to the district where industrial restructuring and upgrading are currently undergoing extensive development."

Only a limited number of developers, probably leading players with affluent capital, would likely express interest in the two parcels while a rather low premium should be expected for the auction, industry analysts said.  

At present in Shanghai, developers of housing land plots are usually required to hold 15 percent of their total space with the rest being allowed for sale on the open market.


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