Property developers boost land purchases

China's major property developers are accelerating purchases of land parcels due to the recovery in the real estate market, at a time when local governments are eager to boost revenues.

Seven major real estate developers bought land parcels worth 8.87 billion yuan ($1.34 billion) in first- and second-tier cities from Sept 5 to 7, industry data showed.

China Vanke Co Ltd, the country's biggest property developer in terms of market value, paid 4.67 billion yuan for two land parcels in Guangzhou and Hefei on Sept 5 and 6, which was 1 billion yuan more than the company spent in August.

Yu Liang, president of China Vanke, said that the company is thinking about investment returns, and that if appropriate opportunities come up, it will go for them whether they are in first- or second-tier cities.

Other major property developers are following suit.

China Resources Land Ltd paid nearly 2 billion yuan for land parcels bought in three days this month.

The purchases by Vanke, an industry bellwether, indicate that property developers are now more optimistic about the market, said Zhang Dawei, head of the research department at Hong Kong-based Centaline.

"Since land prices are relatively low, this is a good time for real estate companies to boost their land reserves," said Zhang.

China's property market has been recovering. The country's real estate development index, a key barometer of the country's property market, saw a small rebound in August after sliding 14 months in a row, according to the National Bureau of Statistics.

The index stood at 94.64 in August, up 0.07 percentage points compared with July.

"Though the index is still below 100, which means that the market is still bearish, the rebound indicates that the worst time for property developers is over," said Chang Qing, an analyst at Homelink, a Beijing-based real estate consultancy.

Property investment for the first eight months of the year was about 4.37 trillion yuan, up 15.6 percent compared with the same period last year, the NBS said.

According to property developers' 2012 interim reports, the balance sheets of many major developers have largely improved so they are more willing to boost their land reserves, said Carlby Xie, head of research at real estate consultancy Colliers International (Beijing).

On the other hand, local governments are also stepping up efforts to launch more quality parcels into the market.

"As the revenues from selling land declined, due to the stringent government measures, local governments are now more willing to launch quality land parcels into the market," said Chang at Homelink. "The trend will continue in September."