紧缩政策产生负面影响 中国“地王”岌岌可危

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The days of Chinese developers snatching up premium properties with record-breaking offers are coming to an end as cooling measures bite and sale prices are squeezed, ending the reign of a handful of "land kings" in the world's second-largest economy.

First coined during the stimulus-fuelled 2009 real-estate boom, the Chinese expression is used to describe developers - at the time mostly state-owned companies - willing to pay whatever it took to secure land banks.

A string of records were broken at auctions late last year, when private-sector real-estate companies increased their presence in the market.

But while the cost of land in premier markets, or first-tier cities such as Beijing and Shanghai, soared 135 percent in the third quarter from a year earlier, property sale prices inched up just 15 percent, according to BNP Paribas.

The already high costs and the prospect of slowing property sales mean the days of records being set at land auctions are coming to a close, analysts say.

Signs of a slowdown, from weaker home price data to developers cutting prices, have already rattled financial markets in recent weeks. Real estate investment accounts for 15 percent of China's gross domestic product.

"Developers will be more rational when bidding for land this year, unlike the huge number of land kings we saw the year before," said Lin Bo, vice-research director at real estate information provider CRIC. "Considering the risks and costs, major developers are not willing to pay for premium land now."

Privately-owned China Vanke, the country's largest listed developer, said on Thursday that one of its operating strategies was to not be a land king.

"When there's a lot of people after a piece of land, we'd rather miss the land than buy wrong," said Tan Huajie, secretary of the board.

China Vanke has won 13 pieces of "premium land" in the country since 2008, making it the No 2 "land king" after state-backed Poly Real Estate Group, according to CRIC.

GOVERNMENT IMPACT

Any slump in prices paid at land auctions could also have an impact on China's indebted local governments, for whom such sales form a major portion of revenue. An average of 24 percent of local government revenue came from land sales in 2013, according to the latest data from the Ministry of Finance.

Chinese data last month showed that sale price rises eased for the first time in 14 months in January, in a sign that the government's more than four-year campaign to rein in property prices to avoid a bubble could finally be starting to bite.

This comes after a string of record-breaking prices being paid at government land auctions.

In September, Sunac China Holdings beat seven rivals to win a residential land plot near Beijing's eastern third ring road for 2.1 billion yuan ($342 million), the ceiling price set by local authorities.

A day later, Hong Kong-listed Sun Hung Kai Properties, Asia's most valuable developer, won a commercial plot in Shanghai for 21.8 billion yuan, a record high in the financial hub.

In a further sign that the market may be losing steam, some smaller developers have already said they won't compete for sites until market conditions improve. Private developers Yuzhou Properties and CIFI Holdings last month said land prices have become too expensive.

"When we see two signs emerge - government easing tightening and lower prices in the land market - then we will increase our land bank in Hangzhou again," CIFI Chairman Lin Zhong told a press conference last Wednesday, referring to a city about an hour from Shanghai.

Among the 10 developers that have won the most premium land since 2008, six are state-backed companies, according to CRIC. Topping the list are Poly Real Estate, China Overseas Land and Greenland Group.

Nearly 20 percent of property sold to land kings during that period remains unbuilt, while three percent of the deals were forfeited by developers due to financing issues after they paid deposits, it said.

With prices in first-tier cities expected to slow to single digit growth or stay flat this year, and private developers increasingly entering the market, the days of state-owned property companies bidding up for premium sites are expected to draw to a close.

"Fewer SOEs (state-owned enterprises) being land kings is in line with the central government's decision to let markets play a decisive role in the economy; they hope to lower the SOE's contribution to the economy and encourage private investment in construction," said Frank Chen, executive director of CBRE Research China.