A tightened credit control policy and tougher anti-land hoarding
stance by the central government has already begun to bite in
China's over-heated real estate market with apparent cool-off
signals prevailing in land acquisition deals in major Chinese
cities over the past two months.
Many land plots in both gateway cities such as Shanghai, Beijing
and Guangzhou and second-tier ones including Nanjing, Hangzhou and
Chengdu, had been bought at starting prices and some even failed to
find buyers.
It is a sharp contrast to what happened just six months ago in
many parts of the country.
"Real estate developers, not only small-sized companies but also
many famous big operations, are facing the same problem - being
short of capital flow as banks tighten their credit controls, a
government requirement mainly aimed to prevent the country's
economy from overheating," said Xue Jianxiong, head of research at
Shanghai Youwin Real Estate Information Services Co.
"Besides, the state council's recent announcement to levy a
20-percent 'land idle fee,' which was not an obligatory requirement
previously, has also had great impact on domestic land supply."
Over the past year, the People's Bank of China had raised its
interest rates six times.
The one-year benchmark lending rate rose to 7.47 percent from
2006's 6.12 percent while the reserve requirement ratio was
increased to 14.5 percent at the end of last year.
In January, the central bank further boosted the proportion of
deposits that lenders must hold as reserves to 15 percent.
Meanwhile, in early January, the state council said developers
would be charged a fee - equivalent to 20 percent of the land
transaction price - for hoarding land plots if they leave those
parcels idle for more than one year after acquisition, and those
being laid aside for more than two years will be reclaimed by the
government. In Shanghai, for instance, a few land pieces, in both
downtown and rural areas, had been recently purchased at low prices
compared with earlier records.
No competition
On January 23, Tishman Speyer Properties acquired a
267,481-square-meter piece of land in New Jiangwan Town for 6.752
billion yuan (US$932 million), and encountered no competition.
The land plot, designated for mixed purposes, including
commercial, residential and office uses, and with a gross floor
area (GFA) of about 900,000 square meters, was sold at its starting
price - a per GFA price of 7,500 yuan per square meter.
However, records show per GFA price for land pieces in the same
area was 6,677 yuan per square meter in November, 2006, 12,500 yuan
per square meter last June and 20,000 yuan per square meter last
November.
Though the Tishman Speyer case might be regarded as a local
government's will to attract world-renowned companies to develop
top-notch projects, the sharp decline of land prices could still
reflect a government stance to curb the over-heated real estate
market, industry insiders said. Almost at the same time, several
land pieces in suburban districts including Nanhui and Jiading had
all been sold at low prices, most around 5,000 yuan per square
meter, a 50-percent drop from less than half a year ago, when the
per GFA price for a land plot in rural Qingpu District reached more
than 10,000 yuan per square meter.
Declining prices over the past two months flags a change of the
previous frenzy and developers are becoming more cool-minded,
industry expert Yin Bocheng said.
(Shanghai Daily February 19, 2008)
