Shanghai Bags USD987.6 Million in First Land Auction After Chinese New Year Holiday

Shanghai raked in CNY6.8 billion (USD987.6 million) from the sale of three residential land parcels in non-core urban areas in the first land auction held in the eastern city after the Chinese New Year.

Greentown China Holdings, which is backed by a central state-owned enterprise, bought a plot in Xihongqiao for about CNY2.7 billion, representing a 6.6 percent premium, with a floor price of around CNY32,000 (USD4,647) per square meter. The other two parcels, one in the Jiading New Town in the suburbs and the other in Changqiao between the inner and outer ring roads, were sold at the reserve price.

The three plots have relatively convenient rail and road transportation infrastructure and are located in areas popular with first-time homebuyers and those seeking initial housing upgrades. In addition, the one in Jiading New Town is surrounded by prominent ecological landscapes, that in Changqiao has mature commercial facilities nearby, and the parcel in Xihongqiao is only a 10-minute drive from the Hongqiao transportation hub, which is dense with high-end commercial centers.

While real estate developers remain cautious in land bidding, the stable start of auctions in Shanghai after the Chinese New Year has sent out positive signals, Zhang Wenjing, general manager of China Index Academy's Shanghai data division, told Yicai.

The auction results also highlight that the room for premiums of auctioned land in non-core areas remains limited, Zhang said, but noted that this is conducive to guiding market expectations to remain rational and leaving developers wide space for price adjustments to reasonably replenish inventories.

Greentown China bought the Xihongqiao plot after over 30 rounds of bidding, with the final floor price exceeding the unit price of land parcels in adjacent areas sold last year. The company has frequently participated in land auctions in Shanghai in recent years, buying a parcel in the city center at a very high price and taking part in auctions for land outside the outer ring road.