China's property developers hesitant to purchase more land
Updated 20:57, 22-Feb-2019
Chen Tong
["china"]
01:51
Property developers need land, but they've been buying less since the start of the year, especially in the big cities. Falling sales volumes and tightening liquidity are what's cooling off the developers.
Land sold by 40 first- and second-tier city governments fell by 15 percent year-on-year in January, according to Centaline Property, one of the largest property agencies in Hong Kong.
Centaline's survey showed that property developers' cooling enthusiasm for land purchases actually began last year when 1,800 land auctions couldn't sell a thing. 
And this year has started pretty much the same way. The survey from the China Index Academy indicated that 1,900 plots of land were sold by 300 cities in January, a month-on-month drop of over 40 percent. 
January has always been a comparatively cold season in the land market, due to government's slower pace of land release during the period. 
However, since the premium rates and the total values of land sold were both lower than expected, it showed that developers are being more cautious about their land purchases this year, based on Lu Wenxi, the senior analyst for Centaline Property.
"Developers are not buying land unless they are certain of its value. They are hedging some risks," Lu explained.
The capital issues of developers themselves should be another important factor in terms of slowing land auctions. In January, developers had to issue corporate debt worth 110 billion yuan (about 16.3 billion U.S. dollars), an amount up 90 percent monthly. And that's on top of the debt they already have to service. 
More land is expected to be released to the market in March, but Shao Minghao, the financial business director for Urban Surveyors, projected that property developers' repayment pressures would continue to cool the land auction market for some months.
“The total issuance value of corporate debt in 2019 will be larger than in 2018. But there is already six trillion RMB (about 891.7 billion U.S. dollars) of debt that will mature this year, an increase of over 100 percent from 2018. That's putting a lot of pressure on the property developers,” Shao elaborated.