Bidding for Beijing land heats up

Beijing raked in nearly 30 billion yuan in the last two weeks of October, selling 12 parcels into a white hot land market to which almost all the country’s developers are flocking.

While a boost to the capital’s fiscal income, it also presents it with a dilemma: a possible oversupply of expensive homes versus an undersupply of modest ones for average, middle-class families.

“All developers are now increasing their presence in tier-one cities like Beijing,” said Guo Yi, marketing head at Yahao Real Estate, a Beijing-based agency that specialises in luxury homes. “The hot competition means either you quit the market totally, or you have to accept high land prices.”

To reduce competition and help shoulder upfront cash payments, developers are going hand in hand. For example, a consortium of Cofco Property, Beijing Capital Land and Tian Heng Development bought a site on Friday in the city’s south, between the fourth and fifth ring roads, 8.595 billion yuan, the second-highest aggregate price paid in Beijing.

It was 45 per cent higher than the reserve price set by the government at the beginning of bidding, which lasted two hours. Industry experts estimate the floor space cost at more than 50,000 yuan per square metre.