(Yicai) Feb. 21 -- Indebted Chinese developer Gemdale Group has jointly won the development rights of a residential plot in Shanghai, reentering the local land market after nearly two years of absence, after surviving the debt repayment peak period.

A consortium of Gemdale and two other builders secured a land plot in Songjiang district for a total of CNY810 million (USD111.7 million), equal to a floor price of CNY26,100 (USD3,600) per square meter, during Shanghai's first land auction of this year yesterday. The price represents a premium of 14 percent.

Compared with other plots auctioned at the same event, the one won by Gemdale's consortium had a relatively low price and was located in a rather remote area.

Because of the widespread financial crisis in the Chinese real estate market, Gemdale temporarily withdrew from the Shanghai land market after acquiring the last plot in the first-tier city in the second half of 2023.

Last year was a peak debt repayment period for Gemdale, which was once on the verge of defaulting. The company had nine domestic bonds, one offshore bond, and three asset-based securities worth a total of about CNY18 billion (USD2.5 billion) maturing in 2024, according to data from China Real Estate Information Corporation.

With means such as asset sales, bank financing, and strengthening cash collection, Gemdale was able to raise funds and repay all its public debts of last year, avoiding defaulting.

Now Gemdale has some breathing space. It only has CNY2.8 billion (USD381.3 million) of public debts maturing this and next years. Moreover, the firm announced on Feb. 14 that it would repay the principle and interests of a maturing bond for CNY1.8 billion, equal to nearly 64 percent of the total, on time.

After settling its debt situation, Gemdale gradually reentered the land auction market. On Jan. 21, it won the development rights for a plot in Hangzhou for CNY186 million, a premium of 31 percent. At the end of last year, its subsidiary Gemdale Commercial Properties acquired the rights to develop a residential plot in Wuhan for CNY354 million.

The plots in Shanghai and Hangzhou are very similar. Both are small, cheap, and in suburban areas with low-density residential areas, suitable for building villas.

"It is not easy for Gemdale to restart land acquisition," a staffer from the company's East China branch told Yicai. "The plots acquired are all small, as the company plans to build high-quality products."

All four plots listed in yesterday's land auction in Shanghai were sold at a premium, which averaged 25.5 percent, with the day's total transfer amount exceeding CNY15.9 billion.

"The biggest feature of this land auction is that developers participated by joining forces to disperse the financial pressure," said Lu Wenxi, a market analyst at Shanghai Centaline Property. The fact that all plots were sold at a premium reflects that developers are very confident about Shanghai’s real estate market, Lu added.

Editors: Tang Shihua, Futura Costaglione