Beijing's land prices hit record despite housing downturn
BEIJING Aug 21 (Reuters) - Authorities in China's capital sold a plot of land at a record 7.46 billion yuan ($1.2 billion) on Wednesday, despite analysts belief that a general downtrend in the property market is worsening.
Located in the west of central Beijing, the plot was sold at a price of 63,377 yuan per square meter, more than double the bid submitted in the auction, data from the Beijing Land Consolidation and Reserve Center showed.
The result was in stark contrast to the cooldown in China's land and property market, which has been dampened by the effects of slower economic growth and a near five-year government campaign to temper fast-rising home prices.
Property sales and prices turned south this year, with new home prices dropping in July for a third consecutive month, official data showed.
Hit by the downturn, developers are no longer as well funded as before and have become cautious when buying land. Some have even given a cold shoulder to expensive state-owned land that is up for sale.
"The high price premium for the plot was due mainly to its unique location in the downtown area," said Zhang Xu, a property analyst at a property consultancy, Home Link, in Beijing.
The land parcel, slated for commercial and residential use, was first put on sale in February. But the auction was suspended by authorities who feared prices may hit a record, creating an awkward situation since the government was supposed to be restraining the once-heated housing market.
Growth in China's land prices slowed for the first time in nearly two years between April and June as the retreat in house prices spread to the land market.
A Reuters poll in July of 15 analysts showed Chinese home prices are likely to rise only 0.5 percent in 2014 as the housing cooldown worsens. (1 US dollar = 6.1472 Chinese yuan) (Reporting By Xiaoyi Shao and Koh Gui Qing; Editing by Simon Cameron-Moore)