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Unease over rising land prices

THERE are concerns that Shanghai's land market may overheat again as two plots were auctioned yesterday at rather high prices, exceeding expectations of many industry observers, analysts said.

Nanjing Landsea, a real estate company in Jiangsu Province specializing in development of high-tech and low-energy consumption buildings, acquired a 9,047 square meter plot in Shanghai's Changning District for 422 million yuan (US$61.8 million), or a per gross floor area price of around 22,000 yuan per square meter.

The land is located near Tianshan Park and designated for residential use.

"That is definitely a very high price because second-hand apartments in neighboring areas built five or six years ago were also sold at similar prices," said Xue Jianxiong, an analyst at E-House (China) Holdings Ltd. "The market is probably showing some signs of getting overheated again, just like what we experienced in 2007."

That was the year when Shanghai's land prices shot up to crazy levels, fueled by developers paying extremely high prices for plots across the city.

Similarly, a plot in the city's Baoshan District also fetched an unexpectedly high price at another land auction.

A 41,400 square meter plot in Gaojing Town and also designated for residential use was sold for 600 million yuan to a property developer from Xiamen, Fujian Province.

The Xiamen Xiangyu Group, which has two residential projects in Shanghai, bought the land at a per GFA price of 9,053 yuan per square meter.

The land attracted a starting price of 248 million yuan and Xiangyu's closest competitor at the auction only offered to pay more than 400 million yuan, according to an industry source who preferred anonymity.

The volume of new homes sold across the city, excluding those designated for relocated residents, totaled 2.04 million square meters last month, from 1.89 million square meters in April, 1.51 million in March and 790,000 in February, according to Shanghai Uwin Real Estate Information Services Co.


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