Land transactions in 13 major cities, including Shanghai, Beijing, Guangzhou, Shenzhen and Tianjin, fell 24 percent year-on-year during the first two months of 2012 and stayed at five-year lows, reports Shanghai Securities News, citing a company filing.

According to industry analysts, the low figures for land transaction area reflected the unwillingness of real estate developers to buy land while property curbs are in place, and this may lead to local governments dropping prices to stimulate land sales.

Further drops in land prices are expected, leaving room for lower prices for commercial residential homes, according to the report.

The C.E.O. of China Vanke (000002,200002), Yu Liang, said the property developers which will beat the market during the  second half of 2012 will be those which report high turnover, did not purchase many plots of land, and sold more properties.

A source at a large state-owned enterprise involved in the real estate sector in east China said the company will not purchase  land unless it is directed by the government, and stressed the difficulty of obtaining banks loans.

The cautious attitudes of property developers led to more instances of land failing to be sold at land auctions since the fourth quarter of last year.

For full year 2011, the transaction volume of residential land plots fell 32 percent year-on-year.

According to Centaline Property, the percentage of land plots which remained unsold at auctions suddenly dropped to eight percent in February due mainly to local governments sharply lowering land prices and reducing the number of land plots put up for sale.

The average price of land transactions in 2011 fell 11 percent from 2010, with prices in Shanghai, Beijing, Guangzhou, Nanjing and Hangzhou down by more than 20 percent.

The drop in the average transaction price was attributed to the higher proportion of land transacted in the outer districts.

The proportion of land plots sold at discounts hit 69 percent in February, up from 37 percent in January.

Some local governments resorted to new measures to push up the land transaction volume. For instance, the authorities in Hefei, Anhui province, simplified procedures for owners of state-owned land for commerce, industrial, and office uses, to develop the land. The measures will be valid until the end of 2012.

Source:capitalvue.com