2016-06-15

Regulators to Developers: Take the High Ground, Stop Chasing Land Prices

In private discussions, regulators have asked developers to restrain themselves in the land market. SOEs, particularly the centrally controlled ones, are being singled out for a more direct message, since these firms are able to best leverage cheap credit. The People's Daily also targeted these companies, saying it was "inappropriate" for them to be engaged in "land king" battles.


This has happened before. State-owned Poly Real Estate (600048) pulled out of a land auction one hour before it was set to begin in Wanliu, Haidian back in 2012. Another five state-owned firms participated in the auction, but were said to "go through the motions."

A similar event is believed to have happened in Hangzhou on June 13, with a lack of enthusiasm from SOE bidders:
June 13, Hangzhou Omi unit SC0302-05 14 plots, a monosodium glutamate factory land transfer, participate in bidding developers include Cinda real estate, China Railway Construction, Gezhouba, CR, Poly such as a public central enterprises.

But the auction for the plot did not meet expectations, after only 12 rounds of bidding, the Commonwealth of peace to total 4.83 billion yuan won the land, the premium rate of only 37.34%.
Needless to say the private developers are happy and think this is needed to cool the market:
In the industry it is commonly believed that if the central enterprises exit the land auction, you can cool down the hot land market.
iFeng: 央企被要求收敛拿地 地价房价能否迎来拐点?

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