More than 80 Chinese and Hong Kong developers are expected to engage in fierce bidding when the tender for five residential sites in Shenzhen opens on Monday, as the city known for its scarce land supply, auctions the largest volume of land in a single day in nearly two decades.
The auction will test developers' financial resolve as they look to bolster their position in Shenzhen, a key technology hub in the Greater Bay Area that integrates nine cities in Guangdong province with Hong Kong and Macau.
Five residential sites with a combined 170,273 square metres (1.8 million sq ft) of land " slightly smaller than the area of Hong Kong's Victoria Park " will be up for grabs when the bidding process gets under way at 3pm, in Shenzhen's largest single-day offering since 2001.
The government has set a premium ranging from 30 per cent to 45 per cent for each parcel, with 15.43 billion yuan (US$2.24 billion) as the combined starting bid price for all the plots.
And when the bids touch the ceiling, developers will then start competing on the basis of area that is devoted to rent-only homes. These homes will be targeted at outside talent.
Major contenders for these sites include mega developers like Poly Development, China Overseas Land and Investment, China Resources Land, Ping An Real Estate. Smaller local developers like China Merchants Shekou Industrial Zone Holdings, China Vanke, Kaisa Group and Logan Property Holdings are also in the fray.
It has been reported in the local media that Hong Kong developers Wharf Holdings and Hongkong Land have partnered with China Merchants Shekou to bid for land, although this was yet to be confirmed.
"It is really rare to see so many developers in an auction," said Li Yujia, an analyst with Shenzhen Property Research Centre, noting developers know that only 40 per cent of the city's land supply between 2018-2035 has been earmarked for private development.
This is also Shenzhen's first residential land sale in 2019. Last year only 11 parcels of residential land were auctioned with six sold to a local government-affiliated developer that plans to build rent-only homes upon them. In 2017 the city did not sell any residential plots.
Among the five plots earmarked for sale, a 32,666 sq metre site in Longhua district is expected to fetch the highest opening bid of 4.54 billion yuan, or 44,000 yuan per sq metre, with the cap set at 5.9 billion yuan.
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