Wuhan belatedly halts 29 billion yuan worth of land sales citing virus outbreak
- Wuhan Natural Resources and Planning Bureau suspends auctions for land worth about 29 billion yuan (US$4.1 billion) before bidding deadline
- Reason may be due to poor interest from developers amid lockdown and restrictions on home sales
Wuhan, the Chinese city at the centre of the coronavirus epidemic, has suspended several land auctions worth about 29 billion yuan (US$4.1 billion) a day before the bidding deadline, citing “virus outbreak” for the move.
The Wuhan Natural Resources and Planning Bureau on Tuesday halted the sale of 10 plots of land with a combined reserve price of 10.5 billion yuan, according to a notice posted on its website. It followed a decision on Monday to hold off an auction for six plots worth 18.24 billion yuan.
The plots, with a combined area of 1.58 million square metres (17 million sq ft), were put up for sale in several stages since December 2, with all of them having the same closing date on February 19.
As the viral outbreak intensified, claiming more lives and spreading across two dozen countries, the bureau decided late last week to conduct the sales through an online process to curb viral transmission risks, before they were pulled altogether.
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“We are not sure why they got cancelled suddenly, but one of the reasons could be that developers are showing little interest in them,” said Yan Yuejin, research director at E-house China Research and Development Institute. “Builders are facing a credit crunch. Why would they want to place big bets now as no construction and sales are being restricted.”
The about-turn comes a big blow for the city facing an unprecedented lockdown, hurting the local economy and factories belonging to some of the world’s biggest companies including French carmaker PSA, PepsiCo and Siemens AG.
Many local governments rely on land sales to fund their development budgets. Wuhan, the capital of central Hubei province, sold a record 172.8 billion yuan worth of land in 2019, according to data compiled by Centaline Property, a 35 per cent jump over 2018. That is equivalent to 79 per cent of the city’s annual revenue.
The coronavirus outbreak has so far killed at least 2,000 people, mostly in mainland China. As a result, more than 110 cities in 12 provinces have ordered developers to shut their sales offices to help contain the virus, according to China Real Estate Information Corp.
The property sector contributes 25 per cent of China’s annual economic output, including all the sectors along its supply chain such as cement and steel manufacturing, according to Moody’s Investors Service.
