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Beijing Market Looks at Recovery as Land Bids Soar

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Beijing  real estate prices  Zhang Dawei  Zhongyuan Real Estate  Beijing Land Reserve Centre  real estate market regulations  Haidian  Zhongguancun Business Zone 

Beijing Market Looks at Recovery as Land Bids Soar

By - Thursday 19 July 2012

A lot of people have a lot invested in the future of Chinese real estate. Many investors went in with 10 year plans for growth and then the government clamp down left them looking a bit worse for the wear. So it is worth treating all reports that the market has bottomed with a pinch of salt from certain sources. Chinese real estate prices are falling because the government wants them do, and it doesn't care about the wallets of investors only about the prosperity of the nation.

However, the latest report that indicates things may be turning for the better comes from the Beijing Land Reserve Centre, a government body in charge of public land management. According to the body two land bids hit high points on Tuesday, including a 53,870-square-meter plot in the southern suburb of Daxing selling at 2.2 billion Yuan (about 346 million U.S. Dollars) and another residential plot 113,816 square meters selling for 428 million Yuan. Home sales also grew in the capital according to the latest data.

The auction winners for the Daxing plot said the land will be developed into residential housing and supplemental commercial space normally reserved for shops, restaurants and offices.

The bids came just one week after a record-breaking residential land bid - 2.63 billion Yuan for a 38,900 square meter plot in Haidian district, home to the Zhongguancun tech business zone.

"The demand for top-rated land has grown as developers recover from cash shortages after a surge in home sales," said Zhang Dawei, a chief market analyst with Zhongyuan Real Estate, a property agent.

"The property market, particularly in Beijing's most sought-after locations, is expected to recover," Zhang said, adding that the market in less-than-ideal locations will remain sluggish.

However, this may not be the recovery in the sense that we are talking about or many are waiting for. As recently as July 7 Premier Wen Jiabao vowed that the government will resolutely implement real estate market regulations and make it a long-term task to curb speculation in the property sector. But with many getting edgy at the knock-on effect on the economy, the government continues to parade its plans to build millions of social housing units to turn the market and the economy around. Thus, it is entirely possible that these new plots are being purchased as part of the effort to build social housing. So, in that sense it would be the recovery the government has promised, a recovery on its terms, not on ours (investors).

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*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.

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