Property News · January 10, 2017

China’s cooling measures mean smaller developers don’t stand a chance


The rich get richer
Parcels of land on the outskirts of Shanghai are being acquired at record-low prices. redstone/Shutterstock
Plots of land in several mainland China cities are rapidly being snapped up by the country’s leading developers at knock-down prices, with cooling measures meaning smaller firms scarcely get a look in.
New policies introduced in October mean that developers may only bid for land with cash – not borrowed money. This gives cash-rich players a huge advantage over their smaller counterparts, South China Morning Post reports.
Subsequently, with fewer developers bidding, there has been a heavy fall in premiums being paid for plots in large cities.
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Last week saw the years first public land auction in Shanghai, where Country Garden acquired a plot in Baoshan, on the city outskirts. The 89,200 sqm plot went for 16,400 yuan (USD2,368) per sqm, just 3.17 percent premium over the starting price.
In stark contrast to this figure, seven months ago, Cinda Real Estate paid a 303 percent premium for a plot, also in Baoshan. In July and August, several developers bid for plots of land in this area, none of which paid less than 100 percent premium.
While other factors may have caused a drop in premiums, the new restrictions on leveraged bidding are said to account for such a remarkable change.
Read next: China had a good end of year despite property investment despite curbs

Source : property-report.com
Read more…China’s cooling measures mean smaller developers don’t stand a chance

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