Shanghai land plot sets China cost record
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A parcel of land sold at auction in downtown Shanghai Monday became the most expensive piece of real estate in China.
The 13,709-square-meter plot in Huangpu District has an interesting history.
It was first sold to Nanjing Suning Real Estate Development Co Ltd for a record 4.4 billion yuan (US$644.55 million) in August 2007, but was returned to the government a year later.
Yesterday it fetched 3.41 billion yuan after going under the hammer for the second time. The per gross floor area, or GFA, price for the plot, designated for retail and office use, was 51,820 yuan per square meter.
The previous national record was set by Shanghai Zendai Property Ltd just a week ago when the privately owned developer agreed to pay 9.22 billion yuan, or a GFA price of 34,148 yuan per sqm, for a 57,000-sqm parcel near the Bund.
A joint enterprise, with 51 percent held by Shanghai New Huangpu (Group) Co Ltd and 49 percent by Shanghai New World Co Ltd, both state-owned conglomerates, acquired the Huangpu District plot yesterday.
In the process, it beat Chinese Estates Group and Wharf (Holdings) Ltd, two real estate giants from Hong Kong.
The parcel of land, located within Jiangxi Road M. to the east, Nanjing Road E. to the south, Henan Road M. to the west and Tianjin Road tothe north, opened for bidding yesterday at a high starting price of 3 billion yuan.
Total GFA space for the project is 65,800 sqm above ground and 40,000 sqm below.
"The land price, the highest in the country, should be acceptable if we consider its unparalleled location," said Xue Jianxiong, an analyst with E-House (China) Holdings Ltd, the country's largest integrated real estate services provider.
"I'm pretty upbeat about this project as prices of prime retail and office properties in the city are expected to go northward over the coming three to five years amid the city's continuous economic growth."
Within a stone's throw from the busy Nanjing Road pedestrian mall, prime retail properties built on the site, for instance, might be able to fetch as much as 100,000 yuan per sqm, according to industry analysts.
Market attention
The land parcel attracted huge market attention in 2007 when Suning Real Estate, a subsidiary of Suning Universal Group, agreed to pay 4.4 billion yuan, or a per GFA price of nearly 67,000 yuan per sqm.
Just a year later, the parcel was in the news again as Suning said in a statement to the Shenzhen Stock Exchange that it had reached an agreement with the Huangpu District government on a reimbursement for the plot.
Suning didn't suffer any loss after withdrawing from the deal because construction of a Metro station, which sits right under the plot, had hampered the timely delivery of the land to the company, initially set for April 2008.
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