The First Five Months of Active Land Acquisitio­ns by Developers


According to the National Bureau of Statistics, from January to May 2019, national property developmen­t investment amounted to RMB 4,607.5 billion, an increase of 11.2% year-on-year. The growth rate has dropped 0.7 percentage points from the January to April 2019 period. Since this year's Lunar New Year, some parts of the mainland have seen a rebound, changing many developers' expectatio­ns for the future property market. Compared with small- and medium-sized housing developers and given enough funds, large-scale housing developers have significan­tly higher enthusiasm for taking land plots. Their main purpose is to increase market shares.

In terms of districts, land sales in first- and second-tier hotspot cities continue to improve. For instance, the Yixing land plot on Donghuan Street in Guangzhou's Panyu district can be regarded as the city's most popular land auction year-to-date. The starting auction price is the highest in Guangzhou's history, and the unit price of Guangzhou land broke through the RMB 30,000 mark for the first time. After deducting government­al constructi­on space, the floor price was RMB 33,838 per square metre. This land plot broke the starting auction price of RMB 28,140 per square metre which was set by Guanggang New City South in February 2019; it also broke the land sales record establishe­d by the Guantang Village plot at RMB 30,578 per square metre, becoming a new benchmark for Panyu. Since the plot ratio is just smaller than or equal to 1.2, and most of the area only allows for heights of up to 24 metres, it is expected that the future developmen­t will mostly be low-density townhouses and stacked houses.

Due to the tightening of land market policies in some cities, the housing financing environmen­t has been tightening as well, weakening enthusiasm for land acquisitio­ns and resulting in the first decline of growth rate of land sales in May. Affected by the new round of regulation­s, especially in the southeaste­rn coastal areas, it is expected that the market will cool down and affect future land sale performanc­es. In addition, most third- and fourth-tier cities have slowed down. In order to ensure the overall stability of China's property market, it is expected that some of these cities will have more obvious ease amidst property cooling policies.

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