(Yicai Global) July 3 -- Fierce bidding for a plot of premium land in the Chinese city of Shenzhen at the end of last week was a stark contrast to China’s slack property market, with the winning bidder forking out CNY12.5 billion (USD1.7 billion), the maximum amount set by the local government.

After 155 rounds of bidding, China Overseas won the rights to develop the land on June 30. It was the eighth plot in Shenzhen ever to go for more than CNY10 billion.

The city’s real estate market has cooled again since staging a modest upturn in March and April. In May, sales contracts for new and second-hand homes fell 20 percent and 13 percent to 2,787 and 2,788, respectively, from the previous month, despite a sound policy environment, according to statistics from the Leyoujia Research Center.

But high-quality homes in downtown Shenzhen are selling fast, so similar plots of land are very popular with developers, said Li Yujia, chief researcher at the Guangdong Housing Policy Research Center under the Guangdong Urban and Rural Planning and Design Institute.

The local government offered the 36,000-square-meter plot of land at a starting price of CNY10.9 billion and a ceiling price of CNY12.5 billion, equal to a maximum of CNY133,000 (USD18,340) per sqm for homes built on it. Properties in a residential community across from the plot sell for about CNY190,000 per sqm on the secondary market.

The newly-auctioned land was not initially intended for homes, but gained a residential use permit on April 26. Many office buildings surround it, but few residential areas.

The plot went to auction quickly after its purpose was changed mainly because the government expects to boost the market by auctioning high-quality land, Li said.

Editors: Tang Shihua, Futura Costaglione