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On August 15, the Shanghai Land Exchange Market released the announcement of the sale of the city’s fifth batch of commercial housing land, specifically 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.

China Business News learned from the Shanghai Municipal Planning and Natural Resources Bureau that since the fifth batch of land supply, Shanghai’s commercial housing land transfer has implemented a “double high, double competition” (two rounds of bidding, two rounds of bidding for high-quality construction standards) approach for plots with higher market popularity. That is, after the bidding completes the previous indicator requirement, it will move on to the next indicator requirement and adopt a gradient competition approach to ultimately achieve the goals of “one plan for one plot of high-quality construction” and “market-based allocation, the highest bidder wins.”

Specifically, the "first round of bidding for high quality" 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; the "first round of bidding" is to reasonably set the starting price for land plots with high market popularity through a comprehensive consultation mechanism before the transfer, and determine the differentiated premium space;

The "second round of bidding for high quality" selects and applies a series of measures such as "bidding for decoration standards", "bidding for public facilities and open spaces", and "bidding for high-end talent housing to be transferred to the government free of charge", and bids in sequence; the "second round of bidding" is to bid again and finally determine the winner in the manner of "the highest bidder wins".

In addition to the existing high-quality construction indicators such as green buildings and ultra-low energy consumption buildings, this transfer has added three indicators: "competitive decoration standards", "competitive public facilities and open spaces, etc.", and "competitive high-end talent housing transferred to the government free of charge", encouraging market entities to build high-quality housing and enhance the public service functions of residential supporting facilities and high-quality public space environment.

At the same time, the high-quality construction orientation and specific competitive indicators of the land parcels will be determined in a differentiated manner during the stage of determining the transfer conditions by the relevant departments of Shanghai 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 parcels.

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.

An insider of a developer told reporters that both the terms of competing for high quality and high prices have actually been implemented in practice before, and will not affect the developers' enthusiasm for land acquisition as a whole.

Another person in charge of investment and development of a real estate company mentioned that the land parcels sold this time also cancelled the construction of affordable housing, and there was no clause in the quality competition for the proportion of affordable housing, which also ensured the purity of high-end projects. Taking the Caojiadu land parcel in Jing'an District as an example, the "high-quality construction" indicators of the land parcel include decoration standards, public service facilities and the proportion of high-end talent housing.

Zhang Bo, director of the 58 Anjuke Research Institute, said that from the perspective of optimizing Shanghai's land auction policy, there are two points worth noting. The first is to adhere to the market-oriented direction of land auctions, and to allow the market to play a greater role in resource allocation through the "highest bidder wins", which itself is consistent with the "dual-track system" direction of the real estate market. On the other hand, a two-round competition for high quality rules was proposed. In addition to focusing on green, ultra-low energy, and prefabricated directions, indicators such as decoration standards, public and open spaces are also included. This is consistent with the "good house" direction promoted by the Ministry of Housing and Urban-Rural Development. In order to promote the supply of commercial housing, it is necessary not only to meet the diversified improvement needs, but also to strengthen the quality improvement of the community inside and outside, and the hardware and software levels.

"This adjustment is also a patch for the land auction rules." Yu Xiaoyu, research director of E-House Research Institute, believes that considering that Greentown recently acquired the most expensive land in the country, Xuhui Riverside, with a premium rate of 30%, but the decoration standard is 5,000 yuan per square meter, it is obviously not in line with the floor price and the final selling price of this land, similar situations will not occur after the "double highs and double competitions".

Yu Xiaoyu predicts that as the market changes in the future, land auction rules will be flexibly adjusted and the differences between each plot of land will be relatively large.

It is worth mentioning that the announcement of this sale clearly states that the market-oriented principle must be adhered to, and enterprises will independently determine the sales prices of commercial housing based on market supply and demand, and implement price filing and listing sales in accordance with national and municipal commercial housing sales management measures.

"This time, there is no clear guide price for the project's future sales. It is expected that this will drive up the prices of high-quality luxury homes in Shanghai that will be launched on the market in the future. The difference in selling prices of projects with different product strengths in the same sector will also widen further," said Yu Xiaoyu.