As many as 24 of the 27 housing land plots which were sold at record prices in 2007 are still awaiting development in Guangzhou, the China Central Television (CCTV) reported on Monday.
The total area of the 24 pieces of land equals 1.21 million sq m, which can be converted into 2.32 million sq m for housing construction, almost as much as the total land sold in the city last year.
Industry insiders say some developers are shelving housing projects on these chunks of land in consideration of costs rather than the lack of capital.
With land prices making up 30 to 50 percent of housing prices in Guangzhou, costly land would make housing projects there less competitive over adjacent projects in terms of price, said a property company manager.
Other developers have left purchased land areas vacant because of their less-than-gratifying financial positions, due to the heavy blow dealt to the housing market in 2008. But even with construction halted on so much land, developers are still optimistic in the market.
"They are waiting for the housing price to jump further, which would enlarge the profit margin if they kick off the housing projects," said the manager. "They are sure to get their hands on the land in one or two years."
Another reason lies in the low costs of developers' inaction, as they are only required to pay 10 percent of the auction price after a deal; the remaining is paid on condition, according local regulations in Guangzhou.
Huang Wenbo, an official from the city's land and housing supervision body, said most owners of the 24 pieces of land have not paid the full land remise fees.
Developers' move to bid for land at record-high prices was fueled by the country's swelling credit and their expectation of further inflation, said Zhong Wei, director at the financial research center of Beijing Normal University.
They are banking on spiraling housing prices to come in time, added Zhong, but it would be disastrous if housing prices balloon to an unaffordable level for consumers, as a lack of sales would break developers’ financial chain.
The limited usable land dilemma affecting the country has forced the Ministry of Land and Resources to ask local governments to inspect the underdeveloped land.
So far, Guangzhou has taken back 26.9 million sq m of unused land, according to Huang.