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Zhabei residential land goes for whopping 10b yuan, city's second-highest ever
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FRANSHION Properties (China) Ltd, the real estate arm of Sinochem Group, has agreed to pay more than 10 billion yuan (US$1.64 billion) for a 96,429-square-meter land plot in Daning, Zhabei District, a price far beyond earlier market expectations.
The parcel, designated for residential development purposes, fetched 10.1 billion yuan, or a gross floor area price of 47,609 yuan per square meter, according to Soufun.com, operator of the country's largest real estate website. That was 111 percent above its starting price.
"It's the second most expensive plot ever sold in Shanghai by average price and also the most costly residential land sold in three years in both Shanghai and the country," said Zhan Zhenhua, an analyst with China Index Academy. "The high price is a reflection of the city's long-time shortage in prime housing land supply as well as the prevalent optimism among the country's real estate developers, most of which managed to register extremely robust sales over the past year."
New homes adjacent to the plot in Daning area are currently sold at an average price of between 40,000 yuan and 50,000 yuan per square meter, according to Song Huiyong, research director of Shanghai Centaline Property Consultants Ltd, a leading estate chain in the city.
"With a GFA price of over 47,000 yuan a square meter, homes built on this plot -- in most cases it takes about two years from land acquisition to the release of the project -- should be offered to the market with a price tag of at least 70,000 yuan per square meter," Song said. "But I don't think 20-percent growth for two consecutive years can be easily achieved."
Lu Qilin, a researcher with Shanghai Deovolente Realty Co, also thought the price was too high.
"In my opinion, 35,000 yuan should be a reasonable price for this plot," Lu said. "Now at a price of over 47,000 yuan, it seems that the developer has little choice except prolonging development of the project in order to make decent profit."
Shanghai saw a red hot land market last year with land sales hitting a five-year high by value amid a strong appetite from developers.
Land parcels totaling 8.6 million square meters, excluding those meant for public uses or affordable housing, were sold in 2013 for 206.1 billion yuan, according to earlier data released by Century 21 China Real Estate.
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