Two land parcels went through 258 rounds of bidding with a 22.8% premium rate. The first land auction in Hefei after the release of the city's new regulatory policies was concluded at a total transaction price of 1.274 billion yuan, and the two parcels were finally won by Dafu and Lianfa respectively.

On November 12, two residential land plots in the urban area of Hefei opened for time-limited bidding, marking the first residential land auction after the implementation of Hefei's new real estate policies.

Eventually, both plots were sold at a premium, with a total starting price of 1.102 billion yuan and a final total transaction price of 1.274 billion yuan. The plot in Baohe District was won by Dafu, and the plot in the Economic and Technological Development Zone was awarded to Lianfa. The highest number of bidding rounds on that day exceeded 100.

First Auction Under the New Policy

In terms of scale, this land auction is not large, with only two residential land plots, but it has attracted a large number of real estate enterprises to sign up for the auction. Moreover, the registered enterprises for the two plots are highly overlapping, and the competition is almost carried out among the same group of enterprises.

Among them, Plot JK202603 in the Economic and Technological Development Zone attracted 9 real estate enterprises including Yihe, China Merchants, Lianfa, Tianfu, China Travel Service, Jinmao, Anhui Expressway, Greentown and China Overseas to register; Plot BH202616 in Baohe District also had 7 real estate enterprises including Yihe, China Merchants, Lianfa, Tianfu, China Travel Service, Jinmao and Dafu participating.

The bidding for the Baohe plot was quite fierce, with more than 200 rounds of bidding in total. During the whole bidding process, Yihe raised the price by jumping four times. The first half of the bidding was mainly the competition between Dafu and Yihe, the two sides raised their placards more than 100 times in less than 10 minutes, and the host even misreported the price because the quotation speed was too fast. The second half turned into competition between China Merchants and Dafu, which also saw hundreds of rounds of placard raising.

Dafu finally won the bid for Plot JK202616 in Baohe District with a total price of 419 million yuan, with a residential transaction unit price of 18.42 million yuan per mu, a residential floor price of 17,269 yuan per square meter, and a premium rate of 22.8%.

This plot is located north of Qimen Road and east of South Hezuohua Road in Baohe District, belonging to the Yaogongmiao sub-area east of the Administrative Affairs District. It covers an area of about 22.38 mu with a floor area ratio of 1.6. The starting floor price is about 14,062.5 yuan per square meter, and the plot encourages the pilot practice of "high-quality housing".

The bidding for the plot in the Economic and Technological Development Zone was relatively moderate: first the competition between Yihe and China Travel Service, then between Yihe and Anhui Expressway, and finally between Yihe and Lianfa.

Eventually, Yihe lost the bid narrowly. Lianfa Group won Plot JK202603 in the Economic and Technological Development Zone with a total price of 862 million yuan, with a residential transaction unit price of 13.72 million yuan per mu, a residential floor price of 12,863 yuan per square meter, and a premium rate of 12.46%. At the same time, this floor price exceeded the 12,833 yuan per square meter set by C&D in the same area on August 28, setting a new record in the Economic and Technological Development Zone in recent years.

This plot is located south of Shimen Road and east of Shixin Road in the Economic and Technological Development Zone, covering an area of about 62.84 mu with the same floor area ratio of 1.6. This plot also encourages the pilot practice of "high-quality housing".

Differentiation and Tests

The two plots sold today are typical plots that "generate calculable and reasonable returns", with small volume, extremely core location, controllable total price threshold and clear arrangement of property value.

It can be seen that under the new rules of existing home sales and capped pre-sale, real estate enterprises are still willing to make substantial capital investment in high-quality improvement-oriented plots with mature supporting facilities and clear customer groups.

The Baohe plot is located in the core improvement sector of the main urban area, between Yaogongmiao Station and Nanping Road Station of Metro Line 4. Surrounded by mature communities such as Tianxia Jincheng, Yunhewan and Yaogong Xinyuan, it is close to Jincheng Primary School of Hefei and the Southern District of Provincial Hospital. Its high maturity of supporting facilities and small volume make it the plot with the highest unit price on that day.

The plot in the Economic and Technological Development Zone belongs to the Nanyan Lake sub-area, adjacent to Nanyanhu North Station of Metro Line 7, with Nanyan Lake Park on the east side, and close to No. 168 Middle School and Haiheng Branch School. With a volume of 62.84 mu and a floor area ratio of 1.6, it is very likely to be developed into low-density products such as townhouses in the follow-up.

The premium rate of 22.8% corresponds to a floor price of 17,269 yuan per square meter. In the sub-area east of the Administrative Affairs District in Baohe, the future pricing of the project needs to cover the land cost, and also face direct comparison with the surrounding second-hand housing prices and existing projects on sale.

In addition, from the perspective of participating bidders, this auction is dominated by central SOEs, local state-owned enterprises and deep-rooted private real estate enterprises. Among them, China Travel Service appeared as a new participant, while Lianfa and Anhui Expressway made their return after a long absence. In the current real estate market, it is quite rare for private enterprises to make moves to acquire land again.

The longer-term test comes from sales. The customer base for low-density improvement products is relatively small, and the sales speed is usually slower than that of affordable housing for first-time buyers. The capital pressure that real estate enterprises take on in the land acquisition link will be transferred to the project launch and capital return cycle.

As the first land auction after the new policy, real estate enterprises have given the answer for core plots in the main urban area through more than 100 rounds of bidding. Whether the popularity will continue to the next land transfer or fade with the increase of subsequent land supply still needs time to tell.

This article is from the WeChat Official Account "View", written by View New Media, and published with authorization from 36Kr.