(Yicai Global) May 8 -- China’s major property developers splashed out more than twice as much on land last month as they did in March as credit and increased land supply give the market a boost.

The country’s top 50 real estate firms bought CNY310.2 billion (USD43.9 billion) worth of land in April, while the top 100 spent CNY388.2 billion on land in April, up 7.2 percent from a year earlier and also more than twice the amount spent in March, according to the China Index Academy.

“March and April are a typically busy period for land purchases, because houses built on this land can be ready for sale by the end of year,” the president of a listed real estate firm told Yicai Global. Developers that need to meet an annual performance target prefer to buy at this time of the year, he added.

“We plan to buy land to build 20 shopping malls and 30 long-term rental apartments this year,” Huang Zhaoyang, chair of China SCE Property Holdings, previously told investors.

“Our senior executives urged us to buy land in a recent internal meeting,” the manager of a top 10 real estate firm told Yicai Global.

Rising Prices

Not only has the amount of land being bought increased, so have prices. Large property developers are driving the trend.

Evergrande Group, ranked third in the amount of land acquired last month, bought a plot in Guangzhou, southern Guangdong province, for CNY6.8 billion (USD961 million). Gemdale, China Fortune Land Development, China Vanke and Sunac China Holdings all bought expensive plots in Nanjing, eastern Jiangsu province, for between CNY4 billion and CNY6.87 billion.

The price of land in 300 cities shot past CNY3,000 (USD424) per square meter in April, the highest level since 2018, according to the CRIC Research Center. The average selling price was 15.6 percent higher than the auction starting price, up 3.3 percentage points from March. In some second- and third-tier cities with good development prospects, land sold for over 30 percent of the asking price.

Most of these property developers have big advantages in terms of scale and their level of financial leverage is low. For instance, the debt-to-net worth ratio of Greentown China Holdings, which bought the sixth-most amount of land last month, is just 63.2 percent, lower than the industry average. The ratio at Future Land Development Holdings, which ranked seventh and does not hold many land assets, is 16.36 percent.

Cheap Loans

Looser monetary policies and additional private funds flowing into the real estate sector have also prompted developers to buy more land.

The financing costs of real estate firms backed by state-owned enterprises have dropped greatly to between 3 percent and 4 percent, according to Xizheng Capital Management. Leading private companies are borrowing at annual rates of between 4 percent and 8 percent, a big drop compared with last year, it added.

Editors: Tang Shihua, Kim Taylor