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Beijing Sells Residential Land at Record on Luxury Home Demand

Beijing Sells Residential Land at Record on Luxury Home Demand
A couple walks toward residential buildings at the Fun City apartment complex in Beijing. Photographer: Tomohiro Ohsumi/Bloomberg

Beijing sold a high-end residential land parcel for a record price as developers sought to tap rising demand for luxury homes even as the government maintains its property curbs.

The 75,360 square-meter (811,168 square-foot) Sunhe plot, in a northeastern part of the city known as the “central villa district” near the airport, was sold for 2.36 billion yuan ($385 million) to COFCO Property (Group) Co. on July 23, according to a statement on the local land reserve center’s website. That implies about 46,000 yuan a square meter of buildable area, beating a record set July 3 by a site in southwest Beijing, according to realtor Bacic & 5i5j Group.

The number of apartments sold for more than 10 million yuan in the Chinese capital jumped 81 percent to 1,388 in the first half from a year earlier, as wealthy buyers favored bigger properties under the government’s purchase restrictions, Bacic & 5i5j said. China’s new home prices rose in all but one city in June, official data showed this month, underscoring Premier Li Keqiang’s struggle to make housing affordable even as the economy cools.

“The price won’t affect the ordinary people as the land will probably be used to build villas” rather than apartments for the mass market, Cheng Haoye, a senior manager at Bacic & 5i5j, the city’s second-biggest property broker, said by phone. “It could actually help lower home prices as such profits from high-end land give the government more money to spend on affordable-housing projects.”

Land Demand

New home prices in Beijing jumped 13 percent in June from a year earlier, according to National Bureau of Statistics data on July 18.

COFCO Property’s Beijing unit won the auction by committing to build 33,000 square meters of public rental housing after a land-price ceiling was reached, according to the land reserve center. Phone calls to the developer’s Shenzhen-based board secretary Li Hui went unanswered.

Land sales rose 67 percent to 51 billion yuan in China’s 10 major cities in June from last year, according to China Real Estate Information Corp., a Shanghai-based property data and consulting firm.

Shanghai on July 3 sold the most expensive plot in the city this year, a 79,500-square-meter site, for 4.9 billion yuan to developers including China Vanke Co. The same day, a piece of land sold in Beijing’s southwest Fengtai district for 45,000 yuan per square meter, the city’s highest this year by that measure before the latest auction, Bacic & 5i5j said.

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