2024-08-08
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On August 7, 2024, a new round of centralized land auctions in Shanghai came to an end.
Before the auction started, the former "Xiaomi headquarters plot" on Xuhui Riverside attracted much attention, attracting a total of 7 high-quality real estate companies to participate in the competition, four of which were vice-ministerial state-owned enterprises.
After all, this plot of land has many highlights. First of all, it is located on the first line of Shanghai Xuhui Riverside, close to the West Bund Financial City, opposite the Hong Kong Land Kaiyuan with an average price of 178,000 yuan/square meter, and about 600 meters away from Damuqiao Road Station on Lines 4 and 12, and there is no requirement for affordable housing.
The starting floor price of the land is 100,805 yuan/square meter, which has surpassed the national record for the highest unit price of land. The maximum total price limit is 4.8048 billion yuan, with a premium rate of 30%. If the land finally reaches the maximum price limit, the winner will be determined by lottery.
On the day of the auction on August 7, the 30% premium rate limit was reached in half an hour, and the lottery phase was entered. In the end, Greentown won the bid.With a floor price of 131,045 yuan per square meter, the plot has become the most expensive land in the country.
On August 7, 2024, a new round of centralized land auctions in Shanghai started as scheduled. All five plots listed were successfully sold, with a total transaction area of 256,000 square meters and a total transaction amount of 10.95 billion yuan.The overall premium rate was 12.1%, breaking the historical record of monthly premium rate since 2023.
This batch of land auctions is the second batch of residential land transfers after the introduction of the "Nine Measures for Shanghai". Since the last round, Shanghai land auctions have cancelled the 10% premium rate cap principle implemented since 2021, and there are no relevant provisions on real estate linkage prices in the transfer conditions.
Among the five plots of land in this round of bidding, the Xuhui Riverside plot has attracted the most attention. The land was won by Xiaomi in 2021. At that time, it was commercial office land with a transaction price of 1.55 billion yuan, equivalent to a floor price of 31,001 yuan per square meter. It was originally planned to be built into Xiaomi's Shanghai financial headquarters.In the first half of this year, due to changes in municipal planning land, the government re-acquired the land and the nature of the land was subsequently changed to residential land.
After the listing was relisted, the starting price was 3.696 billion yuan, and there was no requirement for the proportion of small and medium-sized units.The land will be sold through a combination of bidding and auction, with the maximum total price limited to RMB 4.8048 billion. If the land eventually reaches the maximum price limit, a lottery will be used to determine the winner.
It is worth noting that the starting floor price of the land reached 100,805 yuan/square meter, which has surpassed Rongsheng’s national record for the highest unit price of land.In 2016, Rongsheng acquired the Zhongxing Community plot in Jing'an District, Shanghai with a total price of 11.01 billion yuan and a premium rate of 139%. The floor price was about 100,218 yuan per square meter, making it the most expensive plot of land in the country at that time.
There is no real estate linkage price set for the Xuhui Riverside plot being auctioned. For reference, the Hong Kong Land Kaiyuan is across the project, with an average price of 178,000 yuan per square meter, which is the price ceiling for the fourth batch of new homes in Shanghai this year. It was launched in April this year and sold out with a subscription rate of 235%, and was sold out in two hours.
The land reached the 30% premium rate limit half an hour after the auction started and entered the lottery stage. It was eventually won by Greenland with a total price of 4.8 billion yuan and a floor price of 131,045 yuan per square meter, making it the country's highest-priced land.After the end of this land auction, the price system of Xuhui Riverside is expected to be refreshed again.
From the overall perspective of the 5 plots of land sold this time, 1 plot was sold at the ceiling price through lottery, 1 plot was sold at a low premium, and 3 plots were sold at the reserve price.Although the overall premium rate was as high as 12.1%, setting a new monthly premium rate record since 2023, it was mainly raised by the 30% premium of the Xiaomi plot in Xuhui Riverside. In fact, there was a clear differentiation in the heat of this round of land auction market.
From the perspective of real estate companies,Among the five plots of land listed this time, only one real estate developer participated in the auction of remote plots such as Pudong Beicai, Fengxian New Town, and Qingpu Chonggu.Three real estate companies, Greentown, Xiangyu and Poly Development, participated in the bidding for the Hongkou Jiangwan plot, while several real estate companies/consortiums participated in the bidding for the most popular Xuhui Xiaomi plot, including Poly, China Merchants & Xuhui Urban Investment, China Overseas & West Bund Group, China Resources, Greentown, Yuexiu & Xiangyu, and Chenjia.The enthusiasm of real estate companies to participate in the auction is obviously uneven.
Judging from the specific plots of land for sale, the Hongkou Jiangwan plot is located in the inner and outer ring roads. Although the location of the plot is not as good as the Xuhui Xiaomi plot, the transportation is still convenient. The plot is 0.6 kilometers away from the Jiangwanzhen Road Station of Metro Line 3 and has relatively rich living facilities. The land attracted fierce competition from Greenland and Xiangyu. After 24 rounds of bidding, Greenland finally won the bid with 1.2 billion yuan, a premium rate of 6.48%, and a floor price of 48,447 yuan/m2.
The remaining plots in Pudong Beicai, Fengxian New Town and Qingpu Chonggu were somewhat deserted, with one bidder signing up for each, so they were all sold at the reserve price. The bidders were Pukai, Fengxian New Town Company and Poly Developments.
It is worth noting that the enthusiasm of private enterprises in this round of land auctions in Shanghai has increased significantly.Both Greenland and Chenjia actively participated in the auction, especially Greenland, which also participated in the auction of Xuhui Riverside and Hongkou River Bay plots.Judging from the auction results, Greentown had the best luck, not only winning the most popular Xuhui Binjiang Xiaomi plot, but also winning the Hongkou Jiangwan plot with a premium rate of 6.48%. In the end, Greentown's total transaction amount of 6 billion yuan accounted for 55% of the total amount of this land auction.
On August 7, 2024, shortly after the land auction ended, the Shanghai Land Trading Market immediately released the next batch of land auction announcement.A total of two plots of land were put up for auction, namely Plot 9A-20, Unit C050301, Caojiadu Community, Jing'an District, and Plot 094a-14, Unit N070402, Lingshi Community, Jing'an District.
The land transfer notice stated: In response to new changes in the supply and demand relationship in the real estate market and the people's new expectations for high-quality housing, we will give better play to the role of market mechanisms, create a fairer and more dynamic market environment, optimize resource allocation efficiency and maximize benefits, and increase the supply of high-quality residential land.
Since Shanghai's new "Nine Articles of Shanghai" clearly required the optimization of land and housing supply, Shanghai has held two land auctions. Both land auctions cancelled the 10% premium rate cap principle implemented since 2021, and there were no relevant provisions on real estate linkage prices in the conditions of the land transfer.
Judging from the results, in the last round of land auctions, two residential plots in Yangpu were sold at high premiums of 17.12% and 21.18% respectively. In this round of land auctions, the Xiaomi plot in Xuhui Riverside was capped at a premium of 30%. The heat of both land auctions has clearly rebounded.
However, the unevenness of the land auction market still exists.In the last round, two far-suburban plots of land in Baoshan Gucun and Fengxian New Town were sold at the reserve price. In this round, Pudong Beicai, Fengxian New Town and Qingpu Chonggu plots were all sold at the reserve price. The differentiation between hot and cold plots was very obvious.
The reason for this is largely related to the difference in the sales speed of new houses in the urban and suburban areas. Although the market has had certain positive effects after the "517" new policy, the benefits are more concentrated in the urban area. High-quality projects in the central city are even sold out on the first day of sale. The sales of suburban projects are slow, and the sales rate of some projects is even in the single digits.
Against this background, it is not difficult to understand why Shanghai chose to list two residential plots in Jing’an in the fifth batch of land auctions.We believe that in the future, the land supply side will continue to follow the "high frequency, small quantity, and high quality" land supply strategy, and the land auction market will focus on high-quality sectors in core cities.
In general, this round of land auctions in Shanghai continued the pattern of hot and cold differentiation as expected, and the market differentiation will further increase in the future.
It should be noted that maintaining the heat of the land auction market requires not only the guarantee of land quality and the expectation of normal profits, but also good project sales.
As land parcels in the core areas of Shanghai continue to be sold, the popularity of land auctions in these areas may decline to a certain extent. In the future, product competition in the high-end market in Shanghai will also intensify.
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