Major cities in China are slashing the price of land they are auctioning off in an effort to attract bids from cash-strapped property developers facing a market downturn.
Beijing put 12 parcels of land on the market on November 19, including two in eastern Chaoyang district with a combined reserve price of 4.8 billion yuan (HK$5.9 billion), 15 per cent lower than they were priced in September.
The two plots failed to find buyers at the last auction in September, when they were offered as one large site. This time around they are being sold separately.
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"The change means the cost of the land is smaller and was meant to attract more developers and make the land sale successful," said Lu Wenxi, an analyst with Centaline Property's Shanghai branch.
Under a new centralised land-sale programme, some 22 cities including Beijing, Shanghai and Shenzhen are limited to three rounds of land sales this year.
Other cities such as Hanghzou, Shenzhen and Guangzhou have either lowered the prices of parcels on offer in the third and final round or relaxed the rules for developers buying land.
Hangzhou in eastern Zhejiang Province cut the price of four plots that had to be scrapped from the last round because of a lack of interest by as much as 15 per cent.
Guangzhou, capital of Guangdong Province, auctioned six plots that did not find a buyer in September's land auction, with prices down as much as 20 per cent.
Jiangsu's provincial capital of Nanjing, and its wealthiest city Suzhou, lowered the threshold for developers to participate in land sales last week. Suzhou's planning bureau said the deposit for bidding on each plot in the third round of land auctions would be lowered to 30 per cent of the reserve price, from 50 per cent in the previous round.
"Such favourable policies are signals of a relaxation in the real estate environment and underscore that the central government does not mean to kill the sector, but to regulate it better," said Yan Yuejin, director of the E-house China Research and Development Institution.
Almost a third of the 700 parcels of land across China that have gone on sale since September have had to be withdrawn from auction because they failed to generate enough interest.
Land sales are a major source of receipts for local authorities.