Guangzhou’s Land Sales Market Heats Up Again

According to statistics from CRIS, Guangzhou's total land sales and transacted floor area as of mid-december 2018 were as high as RMB124.7 billion and 23.43 million square metres. Among the nine Guangdong cities of the Greater Bay Area, Guangzhou ranked first with both land supply and land transaction levels at a high. Following the announcement of the Outline Development Plan for the Guangdong, Hong Kong and Macau Greater Bay Area on February 28, 2019, the Guangzhou land market has once again heated up. Three high-priced commercial and residential properties were auctioned for the first time this year, and the transactions happened in a flash, reflecting the developers' optimism for the Greater Bay Area's market outlook, thus speeding up the increases in their land reserves. The successful launch of the city's land has been affected to a certain extent by the fine-tunings of the national property market and the slight easing in the credit and monetary policy.

Two of the three land plots were located in Nansha, and one in the Financial City of the Tianhe District. Among them, the Nansha Qingsheng hub was acquired by Sun Hung Kai Properties at a total consideration of RMB1.189 billion, equivalent to an accommodation value of RMB4,530 per square metre. Another piece of land in Dongwan Village in Huangge Town, Nansha, covers residential land converted from the old village, with a total area of 193,100 square metres. It was finally acquired by Xinghe Holdings for a total price of RMB6,678 billion, equivalent to an accommodation value of RMB10,291 per square metre. After fierce competition, the plot in the Financial City was finally won by KWG, with a total consideration of RMB3.707 billion, under a 55% self-owned status, equivalent to an accommodation value of RMB37,500 per square metre.

Guangzhou currently records a decent land sales performance, reflecting the divergence of land supply and transactions in the Greater Bay Area. In fact, given that many cities are still affected by the government's policy measures and the reduction of housing financing channels, the overall land market has been cooling down, and the overall operating land premium rate has declined to 14% as of 2018 (34% in 2017; 99% in 2016). Under a stable environment, the overall land sales market in the Greater Bay Area is expected to return to normal in 2019, and the divergence in land transactions is likely to become a norm.