Shenzhen’s US$2.5 billion land sale is a bright spot for China’s sluggish property market

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China Overseas Land and Investment and China Resources Land snap up 263,000-square-metre parcel in Nanshan district

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The land parcel bought by China Overseas Land and Investment and China Resources Land. Photo: Shenzhen Public Resources Trading Center

Yulu Ao

Published: 6:15pm, 3 Dec 2024Updated: 10:37pm, 3 Dec 2024

A tract of land in Shenzhen sold for a record price, reflecting improved confidence in the nation’s property market after authorities unveiled a series of measures to combat a prolonged countrywide slowdown.

Developers China Overseas Land and Investment and China Resources Land jointly paid 18.5 billion yuan (US$2.54 billion) for a 263,000-square-metre (2.83 million square feet) parcel in a bustling business zone in the city’s Nanshan district, which was 46 per cent higher than the starting price. The property was sold after nearly 300 rounds of bidding.

It was the most expensive land sale in the city’s history, according to data from Centaline Property’s Shenzhen branch, besting a 14 billion yuan sale of a residential plot in 2016.

The site is near an emerging business zone, where office buildings house tenants like Alibaba Group Holding, Xiaomi and Lenovo. According to an official notice, the winning bidders plan to erect commercial buildings, residential units and serviced flats on the land.

“The land site is not subject to the restrictions that limit the price of the residential projects built on the land, marking a shift to market-oriented pricing for Shenzhen, which would stabilise housing prices and support a bullish market outlook,” said Sun Hongmei, an analyst with China Index Academy, a Beijing-based think tank.

The purchase was the first megadeal after China unveiled easing measures for the housing market in all four of its tier-one cities: Beijing, Shenzhen, Shanghai and Guangzhou.

The deal was not isolated. Yuexiu Property Company, a developer owned by the Guangzhou city government, paid 1.9 billion yuan for a plot in the city that measures 20,851 sq metres, according to a statement to the Hong Kong stock exchange.