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Bidders, Please Be Rational: China Land Hunt Sparks Price Surge

  • Land prices rallied 38 percent on average in Shanghai in 2015
  • Margins at biggest developers under pressure from costly land
KUNMING, YUNNAN PROVINCE, CHINA - 2015/12/14: Huge promotion advertisement hangs on a real estate project under construction. The ratio of supply to demand in Kunming is 2.39 and the new house vacancy rate is over 70%. In 2016, Chinese government will take more steps to tackle the high real estate inventories.
Photographer: Zhang Peng/LightRocket via Getty Images

In a tower with a golden facade that the local government uses as a venue for land auctions near Shanghai’s business district, a dozen Chinese developers were involved in a frenzied bidding war in October. Within 25 minutes, they pushed the price of a plot of land an hour’s drive from the city center almost 50 percent higher.

“Everyone, please be rational in bidding,” the auctioneer cautioned.