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Land sales in China's 10 big cities surge in Jan

Updated: 2013-02-05 10:43
By Hu Yuanyuan ( China Daily)

Land sales figures in China's 10 key cities almost tripled in the first month of 2013, fueled by property developers' improved cash flow and expectations of a rosy real estate market this year.

The 10 key cities tracked by Shanghai E-house Real Estate Research Institute saw a land remise fee of 56.2 billion yuan ($9.02 billion) in January, up 263 percent from the same period last year, the institute's statistics showed on Sunday.

Moreover, the area of land sold in those cities last month was 26 million square meters, an increase of 77 percent year-on-year. The 10 cities include Beijing, Shanghai, Guangzhou, Shenzhen and Tianjin.

The two sets of figures also showed that the price of the land grew at a much faster rate.

"Last year's market recovery has helped most property developers improve their cash flow greatly, and the optimistic expectation for this year's market further strengthens their confidence in snapping up more land," said Wu Xiaojun, researcher with Shanghai E-house Real Estate Research Institute.

The China Developers Sentiment Index, an index developed by Standard Chartered based on its quarterly survey of 30 mainland developers, indicated a continued expansion in the fourth quarter of 2012.

Developers' appetite for expansion is returning, with land purchases up. In both the primary and secondary land markets, bigger developers are getting even bigger at the expense of smaller firms, the bank said in a research note on Monday.

"Construction activity is set to pick up in the next few months. The de-stocking of apartment inventories continues, though the pace varies across cities," said Stephen Green, an economist with Standard Chartered.

Developers expect home sales to be even better this year than 2012, and also expect to see apartment prices rise moderately, he added.

New-home prices in China rose 1 percent in January, the eighth straight month-on-month increase since June.

The average new-home price in 100 Chinese cities increased to 9,812 yuan per sq m, according to the China Index Academy, a research institute under SouFun Holdings Ltd, the country's biggest real estate website owner.

The majority of developers expect central government policy to remain unchanged, while counting on easier financing conditions and more flexible local policies, Standard Chartered's survey said.

In addition, most developers see the quickened urbanization as a trigger for a new round of property development.

According to a report by the World Bank, China's large-scale urbanization and related development projects are likely to drive GDP growth to 8.4 percent in 2013.

Industry experts said that the urbanization process must be supported by an industry upgrading, especially in those small cities and towns.

A report by the Institute of Industrial Economic Studies under the Chinese Academy of Social Sciences said that promoting industry upgrading is key to fueling economic growth.

"During the urbanization process, we must build a multifunctional city backed up with key industries. And small towns should play a more important role in promoting the urbanization process," said Wei Houkai, deputy director of the Institute for Urban and Environmental Studies at the Chinese Academy of Social Sciences.

Some developers, in fact, have taken a different approach in taking advantage of the urbanization.

China Fortune Land Investment Development Co Ltd, for instance, is committed to building industrial parks.

The company, in cooperation with the local government, has built industrial parks in Gu'an and Dachang, both small towns near Beijing.

And the Gu'an Industrial park contributed more than 50 percent to the local government's revenue in 2008, according to the report by the Chinese Academy of Social Sciences.

"We are striving to develop such industrial parks in other cities," said Zhang Yong, vice-president of China Fortune Land Investment Development Co Ltd. The company, however, doesn't own land parcels, he added.