(Yicai) Nov. 18 -- Chinese private property developers are starting to make an appearance at land auctions across the country again, however industry insiders warn that they are mainly bargain hunting and overall the mood is still cautious.

Private real estate firms have been largely absent from land auctions since the second half of 2021, due to the deteriorating state of their finances, poor sales and even debt risks. However, since the end of September, in the wake of a raft of government stimulus policies being rolled out, investment funds, including private companies, are returning to the land market.

For example, two land plots in Chengdu, the capital of southwestern Sichuan province, recently sold for record-breaking prices to two private developers in the space of a month, sending encouraging signals to the local real estate market.

Yuanda Group outbid seven other firms for a land parcel in Chengdu’s high-tech zone on Nov. 6 with a winning bid of CNY2 billion (USD276 million). This was a 46 percent premium on the starting price and worked out at CNY26,300 (USD3,630) per square meter, the highest ever in the zone.

Beihaojia (Chengdu) Real Estate set another record last month when it won the bidding for a plot of land in Chengdu’s Jinjiang district with a floor price of CNY27,300 per sqm, an all-time high in the metropolis.

Private developers are also snapping up land in other second-tier cities such as Xuzhou, Xi'an, Zhengzhou, Wuhan, Hangzhou, and Nanning.

But the type of participant has changed, Yicai noticed. Large, private developers have not been actively buying land. Rather, it is small local developers or those from other sectors such as steel and real estate sales, that are bidding for land.

Property sales in major cities rebounded significantly in October, but this month they have started to slide again, showing that the future trajectory of the real estate market is uncertain, Zhang Hongwei, founder of Jingjian Consulting, told Yicai. Therefore, developers remain cautious when it comes to buying land and private firms in particular.

"The recent instances of private companies acquiring land are mainly sporadic replenishments based on their own land inventory and real estate sales. These firms are not strategically and actively adding to their land reserves. It is not yet time for private real estate companies to start purchasing land on a large scale," Zhang said.

Editors: Tang Shihua, Kim Taylor