(Yicai) Sept. 4 -- Chinese real estate developers have become more cautious about acquiring the rights to develop land this year amid a surfeit of unsold homes, declining sales, and difficulties in raising money.

More than 70 percent of builders spent less on land acquisitions in the first eight months of the year, according to data from China Real Estate Information Corporation. Even many large state-owned enterprises, which made relatively big outlays last year, have halved spending on land.

Chinese developers are dealing with a complex mix of high debt levels, sluggish sales, high inventories, and financing difficulties, against the backdrop of a broader economic slowdown. A number of large builders, including China Evergrande Group, have even defaulted.

Many developers are adopting a "sales-driven investment" strategy, investing only as much as they can afford based on sales revenue, said Liu Shui, enterprise research director at the China Index Academy. They need to be wary of land investments as their cash balance is shrinking because destocking is still slow and sales have not yet picked up, he noted.

Sales revenue at China's top 100 developers plunged nearly 39 percent in the eight months ended Aug. 31 from a year earlier, with almost 40 percent logging steep declines, according to China Index Academy’s data.

As long as sales remain sluggish, land investment will continue to decline, said Yu Xiaoyu, research director at property think tank Eh Consulting, adding that the absence of a market environment conducive to builders raising finance is also weighing on land purchases.

A manager at Longfor Group Holding said earlier that the investment strategies of private developers now prioritize safety, as paying back debt on time is more important than making new investments.

Executives at other property firms also told Yicai that their investment strategies mainly focus on allocating resources to core cities and prime locations, developing projects with clear demand to ensure the safety of their investments.

But this strategy could lead to a surge in land prices in core cities and districts because many leading developers will likely fight over them, Yu pointed out. The market downturn has not prevented the emergence of high-premium plots, as companies with the means to acquire land vie for prime locations, she said.

Heated competition may increase risk. Investments in Beijing, Hangzhou, and Shanghai were considered relatively safe, but projects in these cities have also become unprofitable as a result of crowded land auctions, said Guo Jiafeng, chief executive at property developer Greentown China Holdings.

In the first half, spending on land by the top 100 developers sank 40 percent to CNY420.4 billion (USD57.8 billion), according to figures released by the research center of China Residence Information Circle in July. New home sales fell 25 percent, National Bureau of Statistics data showed.

Poly Developments and Holdings Group, China's largest property developer by sales value, bought the land use rights of 12 lots for CNY12.6 billion (USD1.8 billion) in the first half, down from 41 lots and CNY70.9 billion a year earlier.

Vanke, once China's largest developer, invested only CNY1 billion (USD140.7 million) in three land plots in the six months ended June 30. The Shenzhen-based firm dropped out of China's top 100 list for land acquisitions in the period.

As of July 31, it took an average of 26.6 months to sell a newly built home in one of China's 100 major cities, compared with 12 to 14 months in a normal market environment, according to a report by the E-House Real Estate Research Institute.

Editors: Tang Shihua, Futura Costaglione