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Fever of land purchase continues in Shanghai

LAND purchasing fever continued unabated in Shanghai today after COFCO Property Investment Co agreed to pay a premium of 235 percent for a pure residential plot in Pudong New Area.

The real estate arm of China National Cereals, Oils and Foodstuffs Corp beat more than 20 rivals when it paid 2.44 billion yuan (US$366 million) for the 56,886-square-meter site in Xinchang of Pudong.

COFCO's bid was equivalent to about 35,744 yuan per square meter of gross floor area. However, the actual GFA price should exceed 38,000 yuan per square meter as some public service facilities are required to be built on the site and must be held by the developer.

This land price has already exceeded current home cost in the neighborhood, which stands at a maximum price of around 30,000 yuan per square meter.

"Tight supply of parcels should be the major reason behind the city's overheated land market," said Zhang Hongwei, director of researcher at Tospur, a Shanghai-based real estate consultancy service provider. "As housing demand is expected to remain robust in the next three to five years, developers' appetite for residential plots will continue to be strong."

Since May, developers from across the country have been making media headlines by paying big premiums for land plots in outlying districts of Shanghai including Songjiang, Fengxian and Baoshan.

On June 1, Cinda Real Estate Co paid the city's highest premium so far this year, or 303 percent, for a housing plot in Gucun of Baoshan, beating all analysts' expectations.

As of Tuesday, about 200 land plots costing 1 billion yuan and above had been sold around the country, compared to some 110 parcels registered in the first half of 2015, according to Centaline Property data.


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