Caixin
Oct 11, 2012 04:50 PM

Land Sales Start to Rebound, Consulting Firm Says

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(Beijing) – Land transfer revenues for ten major Chinese cities totaled 48.5 billion yuan in September, up 49 percent from August, a report by E-house China R&D Institute released on October 10 said.

The September figure was the highest of the year and a sign that the market has warmed, Wu Xiaojun, an analyst for the real estate consulting firm in Shanghai, said.

Local governments in China get much of their revenue from fees linked to transferring leasing rights to developers, and central government housing curbs enacted in 2010 to cool an overheating market have left many cash-strapped.

Local governments have started to increase the supply of land, and some developers were optimistic about the prospects of the housing market, Wu said. He predicted that land sales would continue to speed up in the second half of the year.

In a sign of the bite Beijing's curbs have had, land transfer fees for the ten cities from January 1 to September 30 totaled 237.5 billion yuan, down 48 percent compared to the same period last year, the report said.

The drop-off prompted local governments to implement policies to trigger sales, to the annoyance of the central government.

In another sign the market was improving, nearly 13,000 hectares of land was put on the market in 300 cities in September, up 7 percent from August, the China Index Academy, a property research organization in Beijing, said.

Also, Beijing took in 25.7 billion yuan from land sales in September, more than the total for the first eight months of the year, data released by the city's land bureau showed.

Due to the central government's housing curbs, local governments were conservative about putting land on the market in the first six months of the year, the academy said. The pace has quickened since the beginning of July.  

As the housing market improved, it would become a driving force for the macro economy in the first half of 2013, Stephen Green, head of Greater China research at Standard Chartered Bank, said.

In some cities, developers have been buying land due to reduced prices, but others are still waiting for prices to fall, Green said.

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