Land sales revenue at 3-year low in 20 Chinese cities31 May, 2012, 12:40. Posted by Zarathustra
By now we have all well known about the burst of Chinese real estate bubble. We also know that land sales is an important source of local government revenue. It comes as no surprise that as the real estate market cools and as real estate developers are in deep trouble with slowing sales and rising debts, one rationale thing for them to do is simply to slow land purchases.
As a result of that, China News is reporting that land sales revenue in 20 of the biggest cities have hit a 3-year low. For May 2012 alone, land sales revenue for the top 20 cities counted to RMB2.7 billion, lowest since March 2009, with 294 pieces of land transacted. And with 5 months passed for the year 2012, total land sales revenue year-to-date for these 20 cities amounted to just 21.3% of total land sales revenue of 2011 for the full-year. Not only has prices fallen, developers are also less interested in bidding, with more than 12% of land apparently received no bids above reserve prices.
I maintain that the Chinese economy has not seen the worst of the impact of the burst of real estate bubble. Don’t be surprised that the recent pick-up in residential transaction volume is simply a dead cat bounce, and real estate developers failing will continue to happen.