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Business / Industries

Land sales at 4-year low

By Wang Zhuoqiong (China Daily) Updated: 2012-05-18 10:16

Land sales reached a four-year low in the first four months of the year despite a slight rebound in new home transactions, an industry report has found.

The total value of land purchases by the top 10 property developers in the first four months reached 18.9 billion yuan ($2.99 billion), a year-on-year decline of 63 percent, according to the monitoring report from Centaline Group.

The level of land purchases is the lowest since 2008, according to the report.

"Real estate developers' desire to acquire new land has dropped significantly," said Liu Yuan, the report's author. "They have grown more cautious in land development."

Major real estate developers including R&F Properties and China Resources have not bought any new land for four consecutive months, the report said.

The long-term slump in business transactions and a restricted financing environment have pushed land developers to cut their costs.

Land sales at 4-year low

Land transfer is the largest expense for home developers, who have high stocks of lands. Major developers have bought enough land for at least seven years of development, Liu said.

The report also found that about half of the purchased land in 13 cities in April had dropped in price.

The government introduced housing market curbs in April 2010. However, local governments have taken measures to stimulate the depressed housing market.

On May 8, Yangzhou in Jiangsu province started offering cash incentives to buyers of finished homes in accordance with the size of the residences they buy. Though the policy in Yangzhou has a minor effect on the real estate market, whether it will stay effective will influence expectations of the property market, the report said.

An earlier stimulus policy in Wuhu, Anhui province, was suspended.

New home transactions have seen a rebound. Such deals last month in 30 major cities reached 13.58 million square meters, the second-highest level since last year, the report said.

Housing supply kept growing last month, with supply exceeding demand in Shanghai, Guangzhou, Shenzhen and Chengdu.

Home prices declines continued to spread from first-tier cities to second- and third-tier cities, the report said.

The Beijing Real Estate Association said in April that prices of new homes in Beijing fell 20.7 percent year-on-year in the first quarter, as property developers offered more discounts to stimulate sales.

Digesting their land stock is still the top agenda for property developers, Liu said. When sales and finance remain sound, they will start considering land purchases at a good price, he added.

The report predicts a small rebound in new home transactions in May but a continuous drop in home prices and land sales.

wangzhuoqiong@chinadaily.com.cn

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