Developer's Record Land Deal Scrapped

The Beijing municipal land regulator announced the cancellation of Beijing Dalong Weiye Real Estate's license to buy a land plot in a record auction due to a delay in payment.

According to a February 1 statement on the website of the Beijing Land and Resources Bureau, Beijing-based Dalong Weiye exceeded the time limit to sign required land transaction contracts. The bureau eliminated Dalong Weiye's qualification in the deal and confiscated the 200 million yuan deposit the company paid.
 
In November, Dalong Weiye beat major developers, including Longfor Properties, Sino-Ocean Land Holdings and Poly Real Estate, in an auction of a land plot in Shunyi District, northeast Beijing. The company agreed to pay 5.05 billion yuan for the plot, making it the largest land deal of the year.

However, the market has expressed doubts on the strength of Dalong Weiye's balance sheets. Dalong Weiye's financial reports showed that the company had paid a 200 million yuan deposit for the auction. But based on the company's current financial capacity, it would take 15 years for Dalong Weiye to pay the total cost of the land purchase. In 2009, Dalong Weiye reported 1.75 billion yuan in revenues with a profit of 338.87 million yuan.

On January 26, the bureau announced that eight developers, including Dalong Weiye, were suspended from land purchases due to delays in contract signings or payments. The move is seen as the government's first enforcement of new policies aimed at bringing down the pace of land purchases and increases in idle land.

(Translated by HW)

Full Article in Chinese: http://business.caing.com/2010-02-01/100112651.html