(Yicai) Aug. 22 -- Land sales have been cooling significantly in many key Chinese cities in the second half, leaving many plots unsold, as cash-strapped property developers, which are facing difficulties in raising finance, become less willing to buy land.

There were no bidders for two plots in Shenzhen, located in outlying Longgang district, in a land auction held in early August. It is the first time this year that residential plots in the hi-tech hub have gone unsold. And in another auction in the city held on Aug. 18, one plot out of the four up for grabs did not sell.

After a fairly upbeat first half, the tide began to turn in July. That month, 26.5 percent of land parcels in key cities went unsold, the highest since last year, according to think tank China Real Estate Information Corp.

Many plots in Hefei, eastern Anhui province and Foshan in southern Guangdong province failed to find a buyer that month. One out of seven plots up for auction in Hangzhou went unsold and six out of eight plots in Nanjing, eastern Suzhou province sold at the reserve price.

Revenue from land sales in 300 major cities plunged 27 percent in July from the same period last year, widening 7 percentage points from June, according to China Index Holdings.

Developers are less keen to buy land as it becomes harder to raise financing. Land acquisitions by the country’s top 100 real estate developers plummeted 20 percent in the first seven months from a year earlier, and 60 percent of them have not bought any land at all this year. This is still an improvement from 2022 when land acquisitions halved from the year before.

Land purchases by private developers have been particularly affected. Last year, private real estate firms accounted for less than 15 percent of all land sales, whereas before 2021 they made up as much as 75 percent, according to Mingyuan Real Estate Research Institute. Even though this figure reached 30 percent in the first half, it is still far below previous levels.

Private developers such as Longfor Properties and Country Garden did not buy any land in July, while Binjiang only purchased CNY1.8 billion (USD251.9 million) worth, a drop of 70 percent from its average monthly purchases in the first six months, according to industry data.

“Our company has not bought any new land in two years and has no more land to develop,” an insider at a struggling private real estate firm told Yicai.

This has led to a slowdown in cities’ land sales, which is a major form of revenue. In the first half, the biggest first-tier cities sold less than 15 percent of their annual target, according to CRIC. Over the course of the year, the sale of residential plots is expected to be just 40 percent of the sales goal.

And the third quarter is likely to be even worse in terms of liquidity, according to a report by Zhixin Investment Research Institute. The outlook for land sales this half looks glum as private developers stay cautious about investing.

Editors: Tang Shihua, Kim Taylor