'Land kings' expected to sit out auction of building plots

By Wang Chao (China Daily)
Updated: 2010-04-14 08:26

Land auctions in Beijing will resume on Thursday after they were halted by the government on March 20. Experts predict a thinner herd of "land kings" will bid.

According to an announcement made by the Land Consolidation Reserve Center in Beijing two days ago, four parcels of land in suburban Beijing, all for commercial use, are ready for auction tomorrow.

The terms for those four properties range from 40 to 50 years. One parcel is in Shunyi district and the other three are in Pinggu district.

Li Mingyu, a real estate analyst at Beijing-based Hejun Consulting Co, told METRO the decision to auction commercial land first was "for caution".

"The land kings appeared one after another the last few months," Li said. "Most of them were seeking land for residential purposes. This time, when the land auction resumes, the government is beginning with commercial land."

Right after the two sessions of the country's top legislators and political advisers in March, three residential land kings emerged; soaring housing prices followed.

On March 23, the Ministry of Land and Resources suspended transactions of land for residential use until a nationwide land-use plan was crafted. That plan is supposed to come out in the coming days.

"If a large portion of land is reserved for affordable housing, the land supply on the market might fall far short of demand," a real-estate developer said in an interview with Beijing News. "Then it will lead to another round of land price rises."

However, Li said that possibility was very slim.

"After the new plan is introduced by the government, there might be a different system to evaluate the potential real estate developers and the bid they offer might only account for 30 percent of the overall qualification scores."

Zhang Dawei, a researcher from the market research department at Centaline Property Agency Ltd, agreed with Li. He said housing prices have risen 120 percent over last year.

"Now high land prices are blamed as being the main contributor, so the land kings will be suppressed," he said.