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Shanghai announced new changes in land transfer transaction rules. Reporters learned from a media briefing held today (August 15) that starting from the fifth batch this year, Shanghai will implement the "double high double competition" measure for land plots with high market popularity, that is, two rounds of bidding and two rounds of high-quality construction standards. Among them, the second round of bidding will no longer set a premium rate cap, and the final winner will be determined by "the highest bidder wins".

At the same time, the Shanghai Land Exchange Market issued the announcement on the transfer of Shanghai's fifth batch of commercial housing land, specifically transferring two plots of land in Jing'an District, with a total land area of ​​approximately 5.01 hectares and a starting total price of 10.679 billion yuan.

This means that in the next batch of land transfers, the two "king bomb" plots in Jing'an will be completely left to market pricing.

Second round of bidding, lifting of upper limit

The "double high and double competition" announced this time can be divided into two rounds of bidding and two rounds of high-quality construction standards. After the bidding completes the previous indicator requirements, it will move on to the next indicator requirements and adopt a gradient competition measure. The specific steps are as follows:

The "first round of high quality competition" is to incorporate universal requirements such as green buildings, ultra-low energy consumption buildings, prefabricated buildings, renewable energy, and BIM technology applications into the land transfer contract. Therefore, this round of "high quality competition" can also be understood as the starting condition before entering the on-site land auction process.

Bidders who meet the conditions of the previous round will participate in the "first round of bidding" at the land auction site. For plots with high market popularity, a comprehensive consultation mechanism before the sale will be used to reasonably set the starting price and determine the differentiated premium space. This link basically continues the previous bidding model of land auctions.

When the previous round of bidding reaches the premium stop price of the land, a "second round of bidding for high quality" will be carried out, and a series of measures such as "bidding for decoration standards", "bidding for public facilities and open spaces, etc." and "bidding for high-end talent housing to be transferred to the government free of charge" will be selected and applied, and bidding will be carried out in sequence.

Bidders who pass the "second round of bidding with high quality" will enter the "second round of bidding" and, through further bidding, the winner will be finally determined on a "highest bidder wins" basis.

It is worth noting that the new regulations are aimed at popular plots in the market. In 2021, Shanghai implemented a price-limited bidding policy to curb the overheating of the real estate market. In May of this year, the "Nine Measures for Shanghai's Real Estate Market" were introduced, canceling the 10% upper limit on the premium rate. However, in the actual operation process afterwards, the price limit did not completely disappear. In the announcement issued by the Shanghai Planning and Natural Resources Bureau on June 7, it was clearly stated that "differentiated regulatory measures can be taken for plots in specific areas with high market heat after decision-making, and the lottery stage will be entered after the premium rate exceeds a certain limit to guide market players to bid rationally."

In the fourth batch of land transfers in Shanghai on August 7, the most popular plot of land in Xietu Street, Xuhui, reached the upper limit of 30% premium rate in the bidding stage, and then entered the lottery stage, and finally the final "lucky winner" was decided by lottery.

therefore,The "second round of bidding for high quality" and "second round of bidding" in this new regulation are equivalent to replacing the previous lottery stage in land auctions.Especially in the "second round of bidding", there will no longer be a cap on the premium rate.This also means that the land prices of popular plots will be determined entirely by market-based bidding.。

Add new indicators to guide high-quality construction

This rule change can be seen in two directions: one is to release market vitality and strengthen the market resource allocation function; the other is to attract high-quality investors and guide the construction of high-quality residential projects.

Another important change in the new regulations is the addition of a "second round of high quality bidding" and placing it before the final bidding round.A relevant person in charge of the Shanghai Municipal Planning and Natural Resources Bureau said that this change is aimed at new changes in the supply and demand relationship in the real estate market and the people's new expectations for quality housing, and will guide the high-quality development of residential construction.

Therefore, in addition to the original high-quality construction indicators such as green buildings and ultra-low energy consumption buildings, this transfer has added three new indicators: "competing for decoration standards", "competing for public facilities and open spaces, etc.", and "competing for high-end talent housing transferred to the government free of charge". These indicators encourage market entities to build high-quality housing, improve the public service functions and high-quality public space environment of residential supporting facilities, attract all kinds of talents to settle down and develop, and create an environment that is suitable for living and working.

Among them, the high-quality construction orientation and specific competitive indicators of the land parcel will be determined in a differentiated manner during the stage of determining the transfer conditions by the relevant municipal departments in conjunction with the relevant district governments (transferors) through a comprehensive evaluation and consultation mechanism, based on the location conditions, product positioning, market conditions, etc. of the land parcel.

After the land is sold, all requirements for high-quality construction will be included in the land transfer contract to achieve full life cycle contract supervision including construction, completion acceptance, and operation to ensure that high-quality construction requirements are implemented.

Jing'an land parcel is sold, floor value is worth looking forward to

With the continuous adjustment of land auction rules, Shanghai's land supply has maintained a high-frequency rhythm, and the quality of land plots has remained high. So far, Shanghai has sold four batches of residential land this year, and none of the 24 plots of land have been unsold. In terms of supply structure, the proportion of land in the central urban area has increased significantly.

Today, while announcing the new land auction rules, the Shanghai Land Trading Market released the fifth batch of commercial housing land transfer announcement, specifically transferring two plots of land in Jing'an District. Although there are only two plots of land in this batch, which is the lowest value since the batch land supply, both plots of land belong to Jing'an, the core central urban area, which is very rare in the batch land supply, and therefore has attracted strong attention from the market.

Jing'an will sell two plots of land.

The most popular plot in the market is the Caojiadu Community in Jing'an District. The plot has a superior geographical location and convenient transportation. It is about 400 meters away from Wuning Road Metro Station on Metro Lines 13 and 14. The surrounding commercial and educational supporting facilities are also mature and high-quality. Next to it are Yueda 889 Plaza and Greenland Jing'an Qicaili. Not far away are Jiuguang Department Store, Jing'an Kerry Center, Hang Lung Plaza, etc. In terms of education, there are Yuyao Road No. 2 Kindergarten and Shanghai No. 1 Normal School Affiliated Primary School.

Caojiadu Community plot in Jing'an District. Source: Tongce Research Institute

Another land parcel for sale is the Lingshi Community in Jing’an District. The land parcel is about 500 meters away from Shanghai Circus City Station on Metro Line 1, and is surrounded by mature living facilities such as Daning Jiuguang Center, Daning International Commercial Plaza, Shanghai Jing’an District Zhabei Second Central Primary School, and Shibei Junior High School (North Campus).

The Lingshi community plot in Jing'an District. Source: Tongce Research Institute

High-quality plots of land will obviously attract more intense market competition. In the last round of land auctions, the Xuhui sloping land plot attracted widespread attention in the industry and attracted seven bidders, including Poly, China Merchants and Xuhui Urban Investment Group, China Overseas and West Bank Group, Yuexiu and Xiangyu, China Resources, Greentown, and Chenjia. After 72 rounds of extreme bidding, the premium rate reached 30% and entered the lottery stage. In the end, Greentown stood out, with a floor price of over 130,000 yuan per square meter, setting a new record for the highest floor price in the country.

Now that the new rules have been introduced, there is no upper limit on the premium rate in the second round of bidding. The two "king bomb" plots sold in Jing'an are likely to attract strong and capable developers to actively participate in the auction. According to the announcement, the total land area of ​​the two plots is about 5.01 hectares, and the starting total price has reached 10.679 billion yuan. In comparison, the previous round of land parcels sold included five plots in Xuhui, Pudong, Hongkou, Qingpu, and Fengxian, with a total transaction amount of 10.95 billion yuan.

Therefore, it remains to be seen who will win the two Jing'an plots and what the land price will be after the bidding. The fifth batch of land auctions is expected to be held in early to mid-September, and the answer will be revealed by then.