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Town strikes again for costly land
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SHANGHAI’S northeastern New Jiangwan Town made the news again yesterday after a housing plot was sold at a price exceeding market expectations.
Rongxin Fujian Investment Group beat six rivals when it agreed to pay 3.16 billion yuan (US$475 million), or a premium of 51 percent to the reserve price, for the 38,900-square-meter parcel in the city’s Yangpu District.
The bid was equivalent to around 52,840 yuan per square meter of gross floor area. But the actual GFA price for the saleable area should exceed 90,000 yuan per square meter since only about 60 percent of homes built on the site could be sold on the open market under government requirements.
“Despite a relatively low premium, this plot, the 10th of its kind released in New Jiangwan Town, actually came with very strict terms, making it an extremely costly piece and a big challenge for the developer,” said Lu Qilin, director of research at Shanghai Homelink Real Estate Agency Co.
The developer needs to hand over to the government at least 25 percent of the homes built on this site as affordable housing while the firm can only lease out 15 percent. Small and medium-sized units should account for 80 percent of the total, according to government documents.
Based on its actual GFA price, Rongxin needs to sell homes for about 130,000 yuan per square meter in order to make a profit, according to Shanghai Centaline Property Consultants Co.
Comparatively, new homes in the area were sold for around 55,500 yuan per square meter during the first half of this year, according to Homelink data.
In November, Cinda Real Estate Co paid 7.3 billion yuan for a 132,000-square-meter housing plot in the area — an average GFA price of 49,152 yuan per square meter. It was then the biggest residential land deal of the year in Shanghai.
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