(Yicai Global) July 1 — Binjiang Real Estate Group, a non-public Chinese developer that ranks 13th in sales, has again won the No. 1 position among land buyers in Hangzhou, China’s main city for land auctions this year.
Binjiang yesterday acquired 12 plots for CNY22.5 billion (US$3.4 billion) in the eastern city’s second auction this year, auction organizer Yicai Global learned. The provincial capital of Zhejiang auctioned off 45 lots for a total of 55.7 billion yuan. The group of buyers included small private companies and state-supported companies.
This year, Hangzhou sold 138.4 billion CNY (20.7 billion USD) of land, once again ranking first among major Chinese cities. But the hometown of Alibaba Group Holding is also special in another way. In Hangzhou, non-state enterprises are active buyers unlike Suzhou and Nanjing, two other major cities in the Yangtze River Delta.
Hangzhou’s latest auction proves that “the city’s land supply is neither too cold nor overheated,” said an investment insider at a local property company. The lack of high-value land indicates that the market is stable and favorable to consumers who need to buy their first home, the person added.
Additionally, there are a number of smaller real estate companies that have acquired land and secured development opportunities, the insider said.
As big developers face tight borrowing conditions, regulations and slow sales, Binjiang is going against the grain and increasing its appetite for land. It has beaten industry giants China Vanke, Sunac China Holdings and Greentown China Holdings in land purchases in Hangzhou for four consecutive years.
Binjiang did good business. In the last auction, the company won several base plots in popular areas at low premiums or reserve prices. In the previous round, it bagged 11 plots for 18.4 billion yuan, including a number of popular locations.
“Binjiang’s consistent efforts in Hangzhou are being rewarded with brand recognition by local buyers,” a company executive told Yicai Global. “In the same market environment, Binjiang products have faster sales speed and higher premiums.”
The company is gaining market share. In the first half of this year, Binjiang’s sales reached 68.4 billion yuan, according to company results released today. That means Binjiang is China’s 13th-biggest property developer, up nine places from a year ago, based on a ranking by consultancy CRIC. The total value of the company’s listing deals in Hangzhou reached CNY 25.2 billion during the period, ranking first among all developers in the city.
Binjiang achieved net sales of CNY 32.2 billion in the first half of the year, an increase of 6% over the same period last year. The average interest rate for new financing fell from 4.9% to 4.7%.
Editors: Tang Shihua, Emmi Laine, Xiao Yi