City announces new rules for land bidding

Shanghai announced its annual land sale plans on Friday while introducing some new rules for the bidding process, a few weeks ahead of its scheduled release of the first batch of parcels on the local market.

Details regarding land bidding involving a total of 52 plots will be released on www.shtdsc.com between May 17 and 20, while those about the second and third batches will be posted between August and September, and between October and November, respectively, according to a statement on the city's land watchdog’s website.

The latest announcement came in line with a new centralized land sale initiative launched in late February by the Ministry of Natural Resources. A total of 22 cities, including Shanghai, Beijing and Shenzhen, are required to limit the number of land sales this year to three times, while raising supply for bidding at each auction, a move aimed to help ease the growth in home prices by forcing developers to curb spending sprees.

To further cool the city's property market, which has been demonstrating signs of overheating recently, a maximum 10-percent premium cap will be imposed in the upcoming land auctions and every developer can only participate in each auction via one entity only.

Meanwhile, a "termination price" for each parcel, which stands somewhere between the starting price and the maximum price, will be set before the auction begins. Under the new mechanism, the company with the highest bidding price will become the winner of the auction if the firm's proposed price sits below the "termination price." 

The open bidding process will be terminated if any company proposes a price equal to or higher than the "termination price.” If that happens, interested buyers will then be asked to submit their bidding price in a written form and the company which manages to propose a price closest to the average will be announced the final winner of the auction.