When a plot in Shenzhen, Guangdong province, was auctioned for a staggering 18.51 billion yuan ($2.53 billion) in December, experts said the deal not only highlights investor confidence and a potential market recovery, but also reflects the ongoing dynamics of Shenzhen's real estate market and the broader context of China's real estate landscape.
"After a period of adjustment in the real estate market, the high-priced acquisition signals confidence among large developers regarding the future of the real estate sector. This helps stabilize market expectations and serves as a positive signal for the market's recovery," said Bai Wenxi, vice-chairman of the China Enterprise Capital Union.
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According to official data, the deal set a new record for the highest total price for land transactions in Shenzhen, although only two bidders registered to participate in the auction for the land better known as plot T107-0107 in Nanshan district.
After 295 rounds of bidding that lasted for an hour and a half, a consortium formed by China Resources Land and China Overseas Land and Investment secured the land over China Merchants Shekou Industrial Zone Holdings, resulting in a floor price of around 70,388 yuan per square meter and a premium rate of about 46.3 percent, which means that the winning bid was significantly higher than the starting price.
Bai said Shenzhen has been promoting its headquarters economy, which emphasizes attracting the headquarters of leading companies in strategic sectors.
"The successful acquisition of this land signifies a commitment to developing high-end residential projects that cater to affluent professionals and executives associated with these headquarters," Bai said.
"The high transaction price signals investor confidence in the region's economic prospects."
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Yan Yuejin, deputy head of the Shanghai-based E-House China R&D Institute, said the record-setting price of plot T107-0107 also reflects in part the current state of China's real estate market, which has been grappling with various challenges over the past few years, including regulatory tightening, decreased buyer confidence and fluctuating property prices.
"The successful bidding process — marked by 295 rounds of competition — indicates a renewed appetite for investment in prime locations, particularly among State-owned enterprises and large developers," Yan said, adding that the removal of certain restrictions and the move toward a more flexible pricing strategy may have encouraged competitive bidding.
Li Yujia, a Guangdong-based researcher on residential policy, also said that in fact, there has been a trend of seeking high-value land deals in major cities.
