Recruiting in China

Chinese largest real estate companies witnessed record-high costs for purchasing auctioned land in the first 11 months of the year, evidence that their profitability might be squeezed in the face of recent tightening moves, an industry report showed.

The combined funds earmarked for purchasing auctioned land for property development by the 40 largest Chinese homebuilders in terms of sales volume stood at 1.01 trillion yuan (147.3 billion U.S. dollars) by the end of November, said Centaline Property, a leading Chinese real estate agency.

This translates into an average price of 6,062 yuan per square meter, surging 50 percent from the previous year, the report said.

The report was released after several measures were introduced to rein in speculative housing purchases, check the risk of asset bubbles and stabilize the market, with dozens of Chinese cities modifying market rules, including the introduction of higher deposits and more purchase restrictions.

"More than 70 percent of these auctioned land plots are located in cities that have rolled out tightening moves, which presages sales and funding difficulties for some homebuilders," said Zhang Dawei, a Centaline Property analyst.

Observers believe that a surge in housing mortgage loans and auctioned land prices contributed to the sweeping increase in home prices across China earlier this year, triggering a string of policies to cool an overheated market.

Some Chinese local governments rely too heavily on land sales for fiscal revenue and deliberately slow supply to push up prices, experts have said.