Land Revenues in Leading Chinese Cities Post 83.4% YoY Rise in April

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New data points to a surge in land revenues across China’s major cities in April, despite efforts by local governments to rein in their own real estate markets.

While the property market control policies launched by China’s municipal governments over a year ago have served to keep a lid on premiums for land transactions, transaction volumes have risen to new highs in major cities around the country.

Data released by Centaline Property on 2 May indicates that 50 large Chinese cities monitored posted land revenues of 284.22 billion yuan in April, for a year-on-year rise of 83.4%.

During the period from January to April the land sale sum for these 50 cities reached 1.1882 trillion yuan, for a rise of 48.8% compared to the figure of 798.4 billion yuan for the same period in 2017.

A total of seven cities monitored saw land revenue amounts exceed 10 billion yuan in April, including Chengdu, Guangzhou, Hangzhou, Nantong, Ningbo, Tianjin and Yangzhou.

Hangzhou posted a year-on-year rise of 237% in one-month land revenues in April, with a total sum of 17.9 billion yuan.

Across the first four months of 2018 a total of 42 cities saw land sale revenues exceed 10 billion yuan, including Chongqing, Fuzhou, Jinan, Wuhan and Zhengzhou.

Zhang Dawei, chief analyst for Centraline Property, said that municipal real estate control policies had proved effective in bringing down the premium rate for land transactions.

“The premium rate is basically around 10% in hot spot cities, far lower than the average of 30% seen from 2015 – 2017,” said Zhang to Economic Information Daily.

“Due to the impacts of a series of policy controls the land market has cooled down. However, the transaction sum remains high, and it is expected that they will remain high for the land markets of major cities around the country in 2018.

“Many cities around the country continue to see high levels of land transactions – especially first and second-tier cities, where real estate enterprises are still actively accumulating residential land.”

Zhang sees headwinds for land prices in China’s new regulations which will make financing more difficult to access for real estate enterprises, as well as the continued application of municipal real estate market controls.

“The recent tightening of trust and other fund regulatory policies have made real estate enterprises more cautious about land whose total price is comparatively high.

“Real estate funding pressure is now gradually emerging…starting from the 930 policy in 2016, first and second-tier cities around the country have continued to intensify controls.

“Under these circumstances, while real estate enterprises will continue to enjoy overall high sales, funding pressure for obtaining land will continue to increase, and active acquisition of lower quality land will markedly decline.”

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