(Yicai Global) Sept. 30 -- Shenzhen has auctioned the rights to 21 residential land lots for CNY45.3 billion (USD7 billion) in the southern Chinese city's second round of centralized land supply this year. The auction attracted many property developers, in sharp contrast to the more tepid interest shown in other cities’ recent land auctions, with the winning bidders mostly state-owned enterprises. 

The auction offered 22 residential lots, the highest number in the Shenzhen land market in recent years. The auction ended yesterday morning, with only one lot unsold, and the 21 lots covering about 80.85 hectares. Competition for prime land in popular areas was fierce, with most of the lots sold at a 15 percent premium, the maximum rate allowed by the city government. 

Over 70 percent of the 19 bidders were SOEs. China Overseas Land and Investment bought the most, spending CNY12.7 billion (USD1.96 billion) for the rights to four lots, followed by Poly Developments and Holdings Group, which spent CNY7.4 billion (USD1.15 billion) for three lots. 

Shenzhen has set a high threshold for bidders, with strict requirements for developers' ability to raise money, develop land, build and sell houses, Li Yujia, chief researcher at Guangdong Housing Policy Research Center, told Yicai Global. This has made SOEs more competitive than private firms, Li added. 

A person in a property firm expressed a similar opinion, saying that private developers are more worried about cash flow and the short-term profit potential given that tight liquidity is a prominent problem and policy curbs on the sector are expected to be here for the long term. 

"This gives SOEs with greater financial strength more opportunities to bid for land rights," the person added. 

Editors: Tang Shihua, Tom Litting