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New "land king" auctioned for 7 bln yuan in Shanghai
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10:30, September 11, 2009

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A plot of land in Putuo, Shanghai became a hotly contested target among 15 real estate giants on September 10. It was ultimately secured by COB Development (Shanghai) Co., Ltd., a central enterprise, for 7 billion yuan, setting a new record price for China's land sold publicly.

The previous high record of China's land market was set by Franshion Properties (China) under Sinochem Group in June. The company purchased a plot of land in Beijing's CBD area for 4.06 billion yuan, much lower compared to Shanghai's new land king.

"If COB Development Shanghai wants to avoid financial loss, house prices here may reach 40,000 yuan per square meter," said Zhao Yuchuan, a real estate analyst.

State-owned property enterprises are very active in Shanghai's land market this year. China Resources Land Limited, a company that has just purchased 5 land plots for 3.5 billion yuan in Jiading, bought a plot of land for 14 billion yuan in Songjiang, Shanghai. Another plot of land at 8, North Xuhong Road, was purchased by Shanghai Urban Construction Group for an astonishing price of 28,000 yuan per square meter.

"Imbalance exists in the financing of Chinese property enterprises," said Hui Jianqiang, analyst of E-house China R&D Institute in Shanghai. Real estate giants enjoy more chances to make massive financing. They can therefore buy better land with higher prices.

Industry insiders pointed out that market concentration rate in China's real estate market would inevitably rise and a strong trend of market integration was emerging. However, they expect to see a virtuous circle from that trend.

"Property giants should avoid lopsided development of the market," said a property analyst.

By People's Daily Online

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