(Yicai) June 24 – Beijing has wrapped up land auctions for the first half of this year, with the city's market remaining mired in a downturn after sales tumbled 66 percent from a year earlier.

Sales of land at auctions in Beijing topped CNY34 billion (USD4.7 billion) in the six months ended June 30, after the last auction for the period closed in Tongzhou district yesterday, according to data released by the China Index Academy late on the same day. The average price fell 35 percent to CNY27,885 (USD4,100) per square meter, while the planned construction area almost halved to 1.22 million sqm.

In addition, the average premium fell to 3.6 percent from 7.2 percent, with only seven of 21 land parcels selling at a premium, compared with nine a year ago, while the rest went for the reserve prices. The number of plots sold at a premium of over 10 percent dropped to four from seven.

Developers have adopted a far more prudent approach to land investment due to demand not yet recovering, said Zhang Kai, head of land market research at China Index Academy. They are concentrating capital on core plots with the prospect of reliable sales absorption and promising profit margins, resulting in a split market landscape where most land sells at reserve prices while a small number trigger intense bidding, Zhang pointed out.

This trend will likely persist in Beijing's land market in the second half of the year, noted Fan Yijie, senior analyst at China Index Academy. High-quality land parcels in central urban areas will attract heated competition and regularly close at a premium, while auctions for plots in suburban and outer districts will face substantial headwinds, with sales at reserve prices dominating, Fan said.

Regarding the Tongzhou auction, one land parcel sold for just over CNY1 billion (USD140.6 million) after five rounds of online bidding and 173 rounds of on-site offers, with the premium reaching 21 percent, the highest for an auction in Beijing in the first half of the year.

The land in Tongzhou drew fierce competition among developers amid overall market pressure, Zhang noted. The main driver was the loosening of the district's nearly nine-year-old home purchase restriction policy, which developers expect will unleash massive potential demand, Zhang added.

Editors: Tang Shihua, Martin Kadiev