State developer sets land price record in Beijing
Policy relaxation fuels housing market surge in tier-one cities, but worries also mount
A state-owned developer set a Beijing land price record of 75,000 yuan per square metre last week, adding fuel to an already heated debate about how to make a profit from such expensive plots of land.
If history is any guide, the risks are worth it, with the capital’s home prices rising so rapidly that aggressive acquirers reaping handsome profits.
However, there are rising fears the next chapter may be different, especially given mainland economic growth is slowing more rapidly than expected, and those fears are putting off private sector bidders.
“Developers are looking to the long term, not now,” said Guo Yi, marketing head at Yahao Real Estate Selling & Consulting Solution Agency, which specialises in luxury homes. “They are confident about Beijing, especially as the government is now relaxing macroeconomic policies now.”
Developers are looking to the long term, not now
On October 20, China Gezhouba Group, a state-owned construction firm that is also involved in a variety of other businesses including real estate development, outbid several consortiums led by industry heavyweights including China Vanke, Longfor Properties and China Cofco Property.
The aggregate price it paid was 4.95 billion yuan, 50 per cent higher than the reserve price set by the local government at the beginning of the auction.
