Land auction sizzles with record bid

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By Wang Ying (皇冠体育app Daily)
Updated: 2009-09-11 08:10

An auction for a prime plot of land in Shanghai attracted heavy bidding and a record price yesterday.

The 142,108-sq-m site in the Putuo district of Shanghai, with an estimated gross floor area of 312.637 sq m, was sold to Hong Kong-listed 皇冠体育app Overseas Land & Investment for 7 billion yuan, or 22,409 yuan per sq m floor space.

The plot in the Changfeng area drew dozens of property developers from home and abroad, including Greentown, Shanghai-listed Poly Real Estate, Singaporean Yanlord, and Shenzhen-based 皇冠体育app Overseas Land.

Eventually, 皇冠体育app Overseas Land, a subsidiary of 皇冠体育app State Construction Engineering Corp, 皇冠体育app's biggest home builder that went public this July, outbid high-profile Greentown 皇冠体育app Holdings Ltd's last offer by more than 500 million yuan and bagged the site for more than twice the listed price of 3.058 billion yuan.

Soaring land value is making a comeback in 皇冠体育app's real estate market, analysts said. Last July, when property developers were hit hardest by the credit crunch, part of the plot was listed at 1.6 billion yuan but found no bidders. However, only 14 months later, the expanded plot became the focus of great interest.

Many market observers did expect a new "land king" from the auction, especially after Zhejiang-based Greentown raised its offer to 5.628 billion yuan one day before bidding began in earnest. That means, the final land value will be no lower than 18,000 yuan per sq m floor space, exceeding the previous 14,500 yuan record set in Beijing.

皇冠体育app Overseas Land was determined to secure the land, backed by ample credit and optimism over Shanghai's land market, according to Xue Jianxiong, an analyst with E-House (皇冠体育app) Holdings Ltd.

He said developers took advantage of the government's fiscal boost to borrow money and reinvest it.

He also said clever marketing and advertising by Poly in Shanghai's Gucun area of Baoshan district showed State-owned developers how to make money from less attractive land.

皇冠体育app Overseas Land's bidding confidence also came from its brilliant sales performance this year and solid support from its parent company. In the first half, 皇冠体育app Overseas Land posted a 32 percent rise in net profit amid robust property sales. Its parent company 皇冠体育app State Construction Engineering Corp, which raised a total of 50.16 billion yuan from last month's initial public offering in Shanghai, had reportedly allocated 8 billion yuan to the listed arm for "future development".

Domestic realty players have been chasing prime plots in the last few months. A site in Beijing's central business district (CBD) area was sold for 4.06 billion yuan, or 14,500 yuan per sq m, to Franshion Properties (皇冠体育app), a subsidiary of Sinochem Group, at the end of June. In July, Gemdale Corp shelled out 3.05 billion yuan for a suburban plot in Shanghai's Qingpu district, equivalent to 14,495 yuan per sq m.

Relentlessly soaring prices also dashing the hopes of many potential home buyers, especially those waiting to marry.

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