Shanghai will probably see a tight supply of residential properties for at least three years due to an insufficient land reserve, a local real estate research company said yesterday.

"The city's peak for land supply for residential uses was between 2003 and 2005 when each year saw 33 million, 28.88 million and 31.49 million square meters of GFA (gross floor area)," said Xue Jianxiong, head of research at Shanghai Youwin Real Estate Information Service Co. "In contrast, it then fell sharply to 19.12 million square meters in 2006 and based on our knowledge, the figure would remain less than 20 million (square meters) for the whole of 2007."

As a result, 21.12 million square meters of residential space were available for construction in 2006, a year-on-year drop of 15 percent. There was hardly any good news this year either because only 14.58 million square meters of housing projects began construction in the city, a drop of 10.6 percent from same period a year earlier.

Industry people said the shortage in land and new homes will just lead to more record prices.

A land plot in the city's northeastern Jiangwan Township launched over the weekend by the Shanghai Housing and Land Resources Administration Bureau would soon become the country's most expensive in terms of the total price, industry people estimated.

The 267,481-square-meter land, with a plot ratio of between 2.3 and 4.9, is designated for mixed purposes, including commercial, residential and office.

The land plot, with a total GFA space of about 900,000 square meters, will easily fetch some 18 billion yuan (US$244 million) in the coming public bidding, industry watchers estimated, based on an earlier price of 20,000 yuan per square meter paid by Singapore-listed Yanlord Land Group for a nearby site in November.

In June, Zhejiang Province developer Greentown China Holdings Ltd bought a land parcel around the same area for just 12,500 yuan per square meter.

The country's most expensive land plot so far is in Changsha, Hunan Province, which was acquired by two Beijing developers in July for 9.2 billion yuan.

Prices for high-end residential properties, especially apartments in Shanghai's downtown area, also soared.

(Shanghai Daily December 27, 2007)