23 July 2019

SOEs asked to bid actively in land auctions to boost market

State-owned enterprises have been snapping up land at record prices in an apparent bid by cash-strapped local governments to revive the property market, China Business News reported on Friday.

Meanwhile, the Xiamen government on Thursday failed to sell a residential site for the first time in four years, as the plot was too large for developers to handle in view of their tight liquidity, according to the newspaper.

In order to stimulate land auctions, several local governments have been urging state-owned developers in private to actively bid for land plots. Authorities have also been increasing the supply of premium sites while lowering the starting price in land auctions to heat up the cooling market.

A similar situation has been observed in Zhengzhou, capital of Henan province. A local state-owned developer on Wednesday won a site for a record 524.3 million yuan, marking a premium of 128.65 percent.

“Leaders of SOEs are appointed by the government. How can they say no?” Wang Qi, chairman of real estate appraisal firm Xiamen Junhe, was quoted as saying. 

The relatively stronger capital position of Xiamen SOEs has enabled them to respond to the authorities’ request, said Zhang Dawei, chief analyst at Centaline Property.

Meanwhile, renowned economist Ba Shusong said the domestic market for second-hand homes is expected to surge.

Speaking at the Boao Real Estate Forum in Hainan on Thursday, Ba said China will have some 125 million units of home inventory by 2015, and over 70 percent of the families in cities and towns will have their own homes next year. Ba said the two factors could lead to a boom in the second-hand home market, reported on Friday.

Ba also cited a new round of population migration is emerging. Migration to cities and suburban areas will create a robust demand in the second-hand home and house rental markets.

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