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May 12, 2016

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High prices paid for 3 land parcels

REAL estate developers paid more than double the starting prices of three residential parcels in Shanghai’s outlying areas as they expanded their land banks despite earlier government efforts to cool the city’s overheated market.

The high prices paid indicated continuing strong interest in land for housing in first-tier cities, an analyst said. The land parcels were also the first to be released for auction in Shanghai since tightening measures were unveiled on March 25.

Xiangyu Real Estate acquired a 52,792-square-meter plot in Nanqiao New City, Fengxian District, for an average gross floor area price of 22,625 yuan (US$3,479) per square meter. That represented a jump of 126 percent from its asking price. The property arm of Fujian Province-based Xiangyu Group beat more than 20 rivals from across the country.

The auctions for two adjacent housing plots in Sijing, Songjiang District, each drew more than 30 developers.

Gree Real Estate, the property arm of Gree Group, a home appliance giant in China, bought a 32,600-square-meter plot for an average GFA price of 37,675 yuan per square meter, or 109 percent above its starting price.

Hong Kong-listed Sunac China acquired the larger parcel of 43,600 square meters for an average GFA price of 38,291 yuan per square meter, up 111 percent from its starting price.

“Yesterday marked the first release of land parcels for auction in Shanghai since the March 25 tightening move and all three residential plots were sold for extremely high prices, indicating unabating interest in residential plots in first-tier cities like Shanghai,” said Lu Qilin, research director of Shanghai Homelink Real Estate Agency Co.

“Prices paid for the three plots are either close to or have already exceeded home prices in the neighborhood, which suggests home prices will probably continue to rise in the city.”

Last week, the average cost of new homes exceeded 40,000 yuan per square meter in Shanghai for the first time amid robust sales in the high-end segment, said an earlier Homelink report.


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