What’s new: Property developers in the eastern Chinese city of Suzhou scrambled to bid for land zoned for large apartments and houses in the latest auction, a sign that demand for fancy real estate in large cities could be rebounding, analysts said.
Of the 11 land parcels put up for sale in the auction this week, developers bid for three of them dozens of times and drove the price up to the pre-set ceiling of 15% higher than the opening price, according to the city government.
The remaining parcels were not as popular, with six sold at the opening price, meaning the buyer had no competition in the bidding process.
The context: Under land auction rules, developers bid up until a pre-determined ceiling price set by the government. If multiple developers hit the ceiling price, they draw lots to see who wins the parcel. Price setting is one of the measures the government has been using to curb speculation.
The three land parcels that were hot tickets with developers are designated by the government for large residential properties. In China, an apartment or house with floor space greater than 120 square meters is widely considered to be so-called “upgrade housing (改善型住房)” — i.e. homes people move into to upsize when their basic needs are already met by a smaller property.
After a protracted period of turmoil in the property market, analysts estimate that the market for large homes could rebound in major cities as the share of demand for “improving housing” is expected to rise to 44.2% of the overall housing demand from 2023 to 2030, compared to 37.5% from 2011 to 2020, analysts at brokerage Shenwan Hongyuan Group Co. Ltd. wrote in a Wednesday note.
The analysts added that most people already have a home that can meet their basic needs, and policymakers have issued policies to support the demand for “upgrade housing.”
Related: More Chinese Families Planning to Buy a Home, Survey Shows
Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Jonathan Breen (jonathanbreen@caixin.com)
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