New land sales stalled despite record release
- Source: Global Times
- [10:01 June 03 2010]
- Comments
Real estate companies bid for five plots of land in Yangpu district at the Shanghai Land Transaction Market last month. Photo: IC
By Li Xiang
The Shanghai government's attempt to cool real estate prices by releasing a high number of vacant plots on the market in April has yet to take effect, with many developers adopting a wait-and-see approach.
The Municipal Bureau of Planning and Land Resources released 105 plots with a total area of 5.05 million square meters on to the market on April 23. It was the first batch to be released this year, and the largest amount of land to be put up for sale at one time by the city government.
However, so far only 32 plots have attracted bids, of which only three have had interest from more than three bidders, according to the bureau's website. Another 17 of the plots have since been withdrawn from the market.
"The local government is increasing the supply of land in an effort to drive down overall land prices," Jiang Peng, senior analyst of macroeconomics at Standard Chartered's Shanghai branch, told the Global Times Wednesday. He added that it is a balancing act for the local government, as driving prices down too far could cut the overall revenue it gets from the land sales.
On May 31, the State Council approved a proposal by the National Development and Reform Commission to introduce a national property tax, although no details have yet been released.
This will come on top of the stricter rules on second home ownership that were introduced by the central government in April.
However, with the property bubble in Shanghai a particularly acute problem, the city government is looking at imposing its own regulations.
"Shanghai's own rules will be far stricter than the national ones, as house prices in the city rose by 50 percent in the six months up until April, and the municipal government needs to fight against property speculation," Jiang said.
But for many large developers, it's business as usual.
"Some popular land lots are still a flash point for intense competition among speculators," Tao Qi, director of research at real estate company Centaline, told the Global Times Wednesday. "The lack of interest in the recently released plots could have many reasons," Tao added.
"We are still willing to buy land for development," a staff member surnamed Zhou at Poly, a State-owned real estate developer, told the Global Times. "Our capital flow is not under strain, mainly thanks to overheating property sales last year."
However, according to a report by business Web portal Caing.com, many small and medium-sized developers who lack the close connections with officials enjoyed by the larger players are waiting for the regulatory environment to settle before making any new deals.
The uncertainty around the property market saw sales of new apartments in May plummet by more than 70 percent on April's figure. Second-hand home sales in Shanghai numbered 6,500 in May, compared to 20,852 in April.
