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July 28, 2016

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Highest price paid for single land plot

LAND fever continued in Shanghai yesterday when the mercury soared as a residential parcel 40 kilometers away from the downtown People’s Square was sold at the highest price for a single plot in the city this year.

Shanghai-listed Gemdale Corp, one of the country’s first real estate developers that went public, beat over 20 rivals when it paid 8.8 billion yuan (US$1.3 billion), or a premium of 286 percent to the reserve price, for the 140,252-square-meter housing parcel in Zhuqiao of the Pudong New Area.

The bid was equivalent to around 33,023 yuan per square meter of gross floor area. But the actual GFA price for the saleable area exceeded 41,000 yuan per square meter as only 80 percent of homes built on the site could be released to the open market under government requirements.

Based on its actual GFA price, Gemdale needs to sell homes on this site for over 50,000 yuan per square meter to break even, industry analysts said.

“Just a few kilometers away from the Shanghai Pudong International Airport, this plot was the most expensive land piece sold in Shanghai so far this year by price,” said Lu Qilin, director of research at Shanghai Homelink Real Estate Agency Co.

“Home to the general assembly base of the Commercial Aircraft Corp of China, Zhuqiao has development prospects as talented people from around the country would be attracted to settle in the area as the domestic commercial aviation industry soars.”

Yesterday’s land price almost tripled that of residential plots sold in the neighborhood some two and a half years ago.

In January 2014, three housing plots in Zhuqiao were sold to two domestic developers for an average GFA price of just above 11,000 yuan per square meter, each with a premium of around 90 percent, according to Homelink data.

“Compared with many of its rivals who have been very aggressive in expanding their land banks, Gemdale has only acquired three land parcels so far this year — one of them in first-tier cities — and that could probably explain the high price it agreed to pay for the Zhuqiao plot,” said Lu Wenxi, senior research manager at Shanghai Centaline Property Consultants Co.


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