Ownership Structure, Leverage, And Land Sale Price

The housing prices in China have soared over the past two decades, which have aroused widespread concerns in society. Meanwhile the increasingly number of regulatory policies in the real estate market leads to a stronger social response to this urgent topic. Considering the fact that the land-on-lease right in China is tied up with the corresponding house-on-sale, we can study the real estate market through analyzing the land leasing transactions in China. Following this logic, the empirical research on the residential land market has both theoretical and practical values, since it can provide a new approach to giving suggestions concerning the large number of real estate issues. Specifically speaking, this paper focuses on the effect of the ownership structure of each industrial firm on its decision in purchasing land-on-lease rights. The data we choose include those land parcels whose buyers are industrial enterprises instead of those firms whose main business is related to real estate. And we apply the hedonic model to discompose the factors that influence the bidding price for each land parcel, and among those variables the key one for our study is the dummy variable that shows the ownership structure of the parcel bidder. The empirical results show that as the land parcel bidder, one state-owned enterprise will purchase more for its land leasing right compared to those private or foreign firms. And this paper also proves that those industrial firms invest in housing market is closely related to their financing capacity.