On April 27, 2015, the Beijing land market finally “opened for business” after the government issued a stimulating policy a month ago. Ten real estate conglomerates including Poly Real Estate, Tianheng Real Estate and Beijing Capital Land (BCL), were in fierce bid for the Plot HD-0402-0030 in the Zhongguancun Yongfeng Industrial Base.

Since 2014, China’s monetary policy has been eased against the backdrop of economic downturn and rising deflation risk, according to Industry analysts. The interest rate was lowered twice on November 22, 2014 and March 1, 2015 to stimulate the housing consumption. Two easing measures jointly issued on March 30, 2015 by the People's Bank of China, the Ministry of Housing and Urban-Rural Development (MOHURD), and the China Banking Regulatory Commission (CBRC) also aimed to boost the slowing real estate market. These efforts have yielded positive results. The housing markets across China are waking up, with major increased transactions in first-tier cities such as Beijing and Shanghai. The land market is following the trend, making the strategic purchase of land a wise move. A number of real estate companies, according to SINA’s real estate channel (www.house.china.com.cn/), are aggressively raising funds to expand their investment in land market, especially in first-tier cities.

Taking advantage of this favorable climate, the confident BCL won the bid with RMB 5.64 billion after 139 rounds of fierce competition, at a land premium rate of 49%. A public rental housing estate of 7,500 m² and an owner-occupied housing estate of 60,500 m² will be built on this plot.

Regarding the future products to be developed on this plot, the head of this project from BCL told SINA’s real estate channel that high-end serviced apartments for young entrepreneurs will be built in response to China’s national policies that encourage popular entrepreneurship and mass innovation.

To be adaptive is the key to market expansion. To promote the “twin engines” of popular entrepreneurship and mass innovation as a national strategy, the Opinions on Accelerating Mass  Entrepreneurship and Innovation through Developing the Mass Makerspace (Opinions) released by the State Council of China on March 11, 2015 called for an accelerated development of the “mass makerspace” to lower the threshold for entrepreneurship and innovation. The goals to be achieved by 2020 stated in the Opinion include: 1) Building innovative entrepreneurship platforms, including makerspace, to satisfy the demand of startup entrepreneurs and to offer professional services; 2) Cultivating angel investors and venture capital institutions to deliver accessible financial support; 3) Incubating plenty of small and micro-businesses to speed up innovation. The products to be developed by BCL in line with the national strategy will be promising, according to analysts.

In addition, this land plot is located in the Zhongguancun Yongfeng Industrial Base and the greater area of Zhongguancun Science and Technology Park, an incubator for small and medium-sized businesses that will benefit from the “popular entrepreneurship and mass innovation” policy. The Yongfeng Industrial Base will endeavor to attract hi-tech industries with strong economic performance and high technology added value that are technology intensive and environmental friendly, such as new materials industry and information industry. Currently, UFIDA Software Park, Yongfeng Aeronautical Materials Park and other businesses have established offices in the Base. The Base borders China Aerospace City and Zhongguancun Life Science Park to the east, Zhongguancun Software Park, Shangdi Information Industry Base and Beijing University Biological City to the south, Cuihu Science and Technology Park and Traditional Chinese Medicine Science and Technology Park to the west, and Daoxianghu Ecological Park Tourist Resort and Modern Agricultural Science and Technology Park to the north. These location advantages explain why this plot is so highly sought after.

The shortage of housing estates in Haidian District also contributes to the potential value of this plot. It is reported that a total construction area of 324,000 m² of land for housing purposes in Haidian District was leased in 4 transactions from 2013 to 2014 and the land for owner-occupied housing only accounts for an area of 44,000 m². The insufficient land for housing purposes limited the supply for the commodity housing market. The accumulated supply/demand ratio in this district from 2012 to 2014 is only 0.86, compared to the highest 2.3:1 of the Beijing city in 2014. As the only housing plot available at present, the Yongfeng plot will become very valuable for real estate development because of its rarity.

The plot is also well serviced. Located in the north of Haidan District, the Yongfeng plot is surrounded by green belts on three sides – bordering the Yongfeng-East 4th Street Green Belt on the east, the Yongfeng-East 1st Street Green Belt on the west and the Yongfeng-North 4th Street Green Belt on the north. On the south it is next to Yongfeng-North 1st Street. Situated in a “most treasured” location in Beijing, the plot is close to schools, including the well-known Tsinghua University Affiliated Middle School and Zhongguancun NO.2 Primary School, hospitals, such as Peking University International Hospital, 309 Hospital, 306 Hospital and Beijing Geriatric Hospital, and shopping centers, like Wumei, Wanfang and Chaoshifa Supermarkets, all easily accessible by public transits. Well connected by Beiqing Road, it is only a 3-minute ride to Jingxin Road and Jingzang Road, and a 30-minute ride to the Financial Street. Better transportation will be provided by the Metro Line No. 16 to start operation soon.

The head of the project added that while few plots in this district are available in recent years, this plot enjoys an ideal location with easy access to transportation routes, employment opportunities and public services.

This land acquisition further demonstrates BCL’s strategic deployment in the three focused regions, namely the Beijing-Tianjin-Henan Region, the Shanghai Metropolis, and the Chengdu-Chongqing Region. Its brand presence is thus expected to be remarkably enhanced with improved performance.