Image: Reuters Berita 24 English - In the first round of auctions staged by China's main cities this year, developers' demand for l...
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| Image: Reuters |
Berita 24 English - In the first round of auctions staged by China's main cities this year, developers' demand for land declined significantly, with fewer cities experiencing price increases. However, sales in Shanghai increased following the city's release from a COVID-19 lockdown.
In order to regulate prices, regulators began limiting land sales in 22 major cities to three rounds per year in 2021, while restrictions on borrowing squeezed already-indebted developers, diminishing their desire for land since the middle of last year.
According to calculations by Reuters based on public notices, nine of the twenty cities that have completed the first round of land auctions for the year 2022 saw average prices rise.
In comparison, eleven cities saw price increases in the third round of 2021 auctions.
Zhengzhou and Shenyang, two provincial capitals severely impacted by China's property crisis, have failed to even hold their first-round auctions, indicating low sales expectations.
Shanghai's auction, which closed on Wednesday, rebounded after two months of stagnation, with all 36 lots sold in China's largest city by economic output.
The average price per lot was $348 million, up 33% over the last sale held in Shanghai in 2021.
"There is a significant profit margin between the land price and the selling price of new residences," said Lu Wenxi, chief analyst at the real estate brokerage Centaline.
Still, state-owned developers dominated the sale, purchasing 30 of the lots, while cash-strapped private developers were hesitant to acquire fresh land.
After a temporary halt of land auctions at the end of March, when a local COVID-19 outbreak began to escalate, Shanghai loosened some bid restrictions in an effort to increase sales.
($1 = 6.6766 Chinese yuan renminbi)
