Shanghai sold a mixed-use plot of land at a record price on Tuesday, giving ample signals that the city's sluggish property market is recovering quickly due to the limited supplies of prime real estate.
The plot in the southern end of the Bund was sold for 24.85 billion yuan ($4.06 billion) to three joint buyers. The previous record was a 21.77 billion yuan deal made in Shanghai's Xujiahui area last year.
The three buyers - China Minsheng Investment Co Ltd, Shanghai Bund Investment (Group) Co Ltd and Shanghai Jiadu Properties - purchased the land for an average net price of 35,392 yuan per square meter. The land parcel will be developed as a project with residential, commercial and office buildings.
Developers, with a penchant for high-end property development, have been steadily acquiring land in several prime locations in the city, said Wu Huimin, director of residential property at real estate company DTZ China.
Indications that the property market is well on the path to recovery surfaced after the recent policy easing helped bring back buyers. The Shanghai government's decision to relax norms for "ordinary homes" has generated huge buying interest.
About 71 percent of the existing homes in Shanghai are expected to benefit from the ordinary home classification and this, in turn, will help more buyers apply for preferential loans and spur overall purchases, Dooioo Property, a Shanghai-based realty services provider.
According to the old standards, only 40.8 percent of supplies in Shanghai were considered as ordinary homes. The new standards, which will come into effect from Thursday, will help boost home sales as they automatically lower the tax for home sellers and the loan rates for buyers.
SouFun, an online property information services provider, said about 65 percent of the more than 1,000 homebuyers it surveyed in Shanghai believe that home purchases will go up in the city.
Developers are still under great pressure as inventories are huge in Shanghai, said Lu Wenxi, manager with the Shanghai research team of Centaline Strategic Management Ltd.
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