Developers loosen purse strings for land deals

Bloomberg and staff reporter

Chinese state-backed developers are starting to buy land at a premium again after the government eased limits on home prices to revive a slumping market that's been a drag on the economy for more than four years.

The number of land parcels that sold for at least 20 percent above the asking price accounted for 37 percent of deals this year, according to a Bloomberg analysis of transactions worth at least 1 billion yuan (HK$1.07 billion) tracked by China Index Academy.

That compares with just 14 percent for all of last year and 4.6 percent in 2023.

Seven out of the 10 transactions this year involved state buyers, including China Resources Land (1109), China Overseas Land & Investment (0688), Poly Developments and Holdings Group, and mixed-ownership firm Greentown China (3900).

The renewed interest in land deals signals some state-backed developers are betting on an eventual rebound in the housing market, even as sales and prices continue to slide on weak consumer confidence.

While not a full recovery, it's the latest sign that China's property market is stabilizing.

There are also other indicators such as a year-on-year growth in new home sales and recovery in home prices showing the property market has bottomed out, said HSBC Global Research.

This came as Shimao (0813) said it had won enough support for its offshore debt restructuring plan from creditors. It will proceed to seek approval from the High Court on March 13, the developer said in a filing yesterday.