Wuhan 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 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.

 “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.”

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% jump over 2018. That is equivalent to 79% of the city’s annual revenue.

The property sector contributes 25% 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.

Source : SCMP - Pearl Liu