The “Land King” is making a comeback! The land markets in several cities are reigniting, showcasing a renewed confidence among real estate companies regarding the future market.
As the real estate market gradually recovers, we’ve seen a resurgence of high-value land transactions across various locations, from Shanghai to Chengdu, Guangzhou, and Hangzhou. The sale of prime plots has become a focal point, attracting fierce competition among numerous property developers.
In recent months, the term “Land King” has frequently appeared in the market. Notably, Greentown has made headlines with significant purchases, securing multiple “Land King” projects across different cities.
On October 22, a plot in Hangzhou’s Shangcheng District drew considerable attention. Located in the Qianjiang New City Phase II, it represented the last capped residential land in the area. After 77 rounds of bidding, Greentown Group, through its subsidiary Hangzhou Greentown Zhizhen City Development Co., secured the land for approximately 3.422 billion yuan, marking a 28.55% premium and setting a new record for transacted floor prices in Hangzhou at around 50,717 yuan per square meter.
Earlier, a fierce land auction took place in Shanghai, where the Xuhui District’s xh128D-07 site was already earmarked for the highest land price in the country even before bidding commenced. With an initial price of 3.696 billion yuan and a starting floor price of 100,800 yuan per square meter, the plot attracted seven competing developers. After 78 bids drove the price to the maximum limit of 4.8048 billion yuan, Greentown emerged victorious with a floor price of 131,045 yuan per square meter, thereby claiming the nation’s new single-price land record.
In March this year, Greentown also acquired the dual-lake site in Suzhou Industrial Park for 3.08 billion yuan, achieving a remarkable floor price of 65,022 yuan per square meter, once again breaking the single-price record for Suzhou.
As a result, the market has dubbed Greentown the “Land King Manufacturer,” with a total investment of about 11.3 billion yuan in Jiangsu and Zhejiang provinces.
Greentown focuses heavily on tier-one and strong tier-two cities. In an August meeting on mid-year performance, Geng Zhongqiang, Executive Director and CEO of Greentown China, highlighted the company’s strategy of concentrating on these urban areas, noting that while the land-to-sales ratio is higher and profit margins might be comparatively lower, these locations provide significant safety and resilience against market fluctuations, ensuring the company’s survival and growth amidst industry downturns.
Beyond Hangzhou and Shanghai, other hot cities are also seeing the emergence of “Land Kings.” In September, during a land auction in Guangzhou, Poly Developments triumphed over competitors like China Overseas and Yuexiu, acquiring the Nanfang Flour Factory site in the Tianhe District for 11.755 billion yuan, which represented a premium of over 33% and set a new floor price record for the area.
Poly Developments commented that this transaction was the first piece of land in the nation to exceed one billion in price following the central government’s commitment to stabilizing the market. As a state-owned enterprise, Poly aims to promote the stabilization of the real estate market and contribute to the industry’s healthy and high-quality development.
Additionally, China’s largest real estate brokerage platform, Beike, also entered the land auction fray. On September 20, the Beijia team under Beike outbid over a dozen developers to win the H12 plot in Chengdu’s Jinjiang District for 1.076 billion yuan, achieving an impressive floor price of 27,300 yuan per square meter and setting a new record for the district.
New single-price records have also emerged in cities like Qingdao and Xi’an, indicating a continued rising temperature in the land market.
Real estate companies are expressing increased confidence in future market conditions. Zhang Bo, director of the 58 Anjuke Research Institute, noted that the high premium land recently acquired in several tier-one and tier-two cities is predominantly located in core areas, which lays the groundwork for the emergence of “Land Kings.” Many of these plots are situated in historically high-end residential zones, where attentiveness and strong support for housing prices enhance their appeal.
According to Zhang, the continuous appearance of new “Land Kings” signals a growing confidence among developers regarding the future market, highlighting a greater appetite for quality land. Despite some of these land prices reaching new heights, the floor prices remain competitive enough to promise a reasonable profit margin. Furthermore, many private enterprises are actively participating in land auctions, indicating that most developers are not opting to “lie flat.” Instead, they are seeking out better plots to develop higher-quality products that can secure a competitive edge in the market.
The latest report from the Central Index Research Institute ranks Poly Developments, Greentown China, and Jianfa Real Estate as the top three in terms of new land value from January to September 2024. State-owned enterprises continue to dominate land acquisitions in key cities, although private companies are also making significant investments in crucial regions to bolster their land reserves.
Meng Xinzeng, an analyst at the Central Index Research Institute, predicts that the trend of differentiated land auctions will persist. While key cities like Chengdu, Guangzhou, and Shenzhen experience high auction activity and premiums, cities such as Nanjing, Suzhou, Tianjin, and Wuxi are still largely seeing subdued auction sentiments with plots often released at base prices. He believes that if market sales stabilize under supportive policies, the atmosphere of land auctions in major cities may continue to improve, although nationwide auctions are likely to remain at lower levels for the time being.
