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Record land sale in Shenzhen underscores China's housing demand

[SHANGHAI] Chinese developers are betting property curbs will eventually be loosened after splashing out for land in Shenzhen.

A sale of five plots of residential land Monday raised 22.4 billion yuan (S$4.47 billion), a record single-day haul since the city, part of the Greater Bay region with Hong Kong, started open land bidding in 2001.

Bidding was so fierce that each plot reached the maximum price set by authorities, leaving developers to compete on how much space they would set aside for affordable housing to be transferred to the government for free. On top of that, condo buyers will be banned from flipping properties for the first three years.

"These developers can hardly profit if current selling restrictions are maintained," said Zhang Dawei, an analyst at Centaline Group. "They're waging a huge bet on policy loosening."

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China has unleashed a vast array of measures to control housing prices, from curtailing developers' fundraising to limit what they can pay for land, to raising deposits for second or third properties, and restricting ownership to holders of local residency permits.

More than 70 developers joined the auction, which lasted almost three hours, the China Fund newspaper reported.

Logan Property Holdings Co. won a parcel near Shenzhen North Railway Station for the equivalent of about 63,100 yuan per square meter of available floor space, a record for the area, according to Zhang Xiaoduan, Cushman & Wakefield Plc's head of research in southern China.

"The land offer is the government's way of calming the market that more land supply is on the way," said Zhang. "But developers are hardly convinced. They know that lots of land resources will be reserved for affordable housing, so such commercial supply is still highly sought after," she said.

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