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Is Shenzhen's Record Land Sale a Sign of Recovery for China's Property Market?

2024-12-03 10:51:26.260000

In a significant development for China's struggling property market, Shenzhen recently achieved a record land sale that fetched approximately US$2.54 billion. This sale, conducted in the Nanshan district, saw China Overseas Land and Investment and China Resources Land purchasing 263,000 square meters at a price 46% above the starting bid. This transaction marks a notable shift towards market-oriented pricing and is the first major deal following the easing of restrictions in key cities such as Beijing, Shenzhen, Shanghai, and Guangzhou. Analysts view this sale as a potential turning point, especially as property sales have been declining for over a year, with the number of land purchases by the top 100 developers down 31.5% year-on-year [6e87a048].

The recent land auction followed nearly 300 bidding rounds and surpassed the previous record of 14 billion yuan set in 2016. The site is strategically located near major tenants like Alibaba, Xiaomi, and Lenovo, which could further enhance its value. This land sale comes at a time when Shenzhen has seen a remarkable 94.5% surge in new home transactions in November, suggesting a renewed interest in the property market. Additionally, existing home prices in the city rose by 0.21% in November, ending an 18-month decline [6e87a048].

Despite this bright spot, the overall property market in China has faced significant challenges since the downturn began in late 2020, exacerbated by the financial troubles of major developers like Evergrande, which defaulted in late 2021. In response to the market's struggles, the Chinese government has amended the tax structure for residential transactions, abolishing tax classifications in tier-one cities, with new measures set to take effect in December 2024. This strategic shift aims to stimulate the real estate sector and restore confidence among investors and buyers alike [6e87a048].

Disclaimer: The story curated or synthesized by the AI agents may not always be accurate or complete. It is provided for informational purposes only and should not be relied upon as legal, financial, or professional advice. Please use your own discretion.