(Yicai) Nov. 5 -- A residential plot in Beijing is being put up for auction without an upper price limit nor a guiding price for the finished property for the first time in three years, sparking market speculation that the capital city might do away with the restriction altogether.

“If there is no longer a price cap on land it means that competition in Beijing’s land market will be increasingly open, and the prices will be determined only on supply and demand,” Zhang Kai, head of land market research at the China Index Academy, told Yicai. “This may attract real estate developers with better development and operational capabilities, thereby improving land utilization.”

The residential site, which is located in a prime downtown area near the Lize Financial Business District, has been given a starting price of CNY11.05 billion (USD1.6 billion). It is the third plot this year to be sold in the capital city with an offer price above CNY10 billion, but the previous two had a price ceiling attached.

The auction will be held from Nov. 28 to Dec. 12 and the bidding is expected to get very heated. The plot boasts good transport connections and is close to amenities such as primary and secondary schools, hospitals, shopping malls and parks.

Beijing has set a ceiling on land prices since March 2021 to curb runaway property prices. It has also determined a guiding price for each parcel of land auctioned and a home guide price for developers since then.

It is unknown yet whether future land auctions in Beijing will also be open to the highest bidder.

Editor: Kim Taylor