(Yicai) Nov. 29 -- A recent land auction in Hangzhou, initially won by a natural person for the very first time, was canceled most likely because it was discovered that the individual did not meet the qualifications required to take part in the bidding. 

The plot of land, which a Hong Lichang believed they had secured for CNY446 million (USD61.6 million) on Nov. 20, remains unsold, according to the website of Zhejiang province’s natural resources online trading center.

Their ‘winning bid’ represented a 65 percent premium on the starting price, the highest in Hangzhou, the provincial capital, for three years.

Hong, an entrepreneur from Shaoxing in Zhejiang, paid a CNY54 million (USD7.5 million) deposit to join in the auction, but according to the rules that is non-refundable if a bidder is later deemed unqualified.

The incident highlights the risks associated with the city’s “bidding first, review later” system, where eligibility checks are done after the auction. Hong presumably did not meet the requirements, an industry expert told Yicai.

Bidders in last week’s auction needed to be legal persons or other organizations qualified for real estate development, according to a notice issued before the auction, meaning natural persons are ineligible to bid in land auctions in Hangzhou.

The prolonged slump in China’s property market has led some cities to allow natural persons to take part in land auctions for the purpose of building private residences. Yiwu and Lishui, two other cities in Zhejiang, have seen natural persons make winning bids.

Editors: Dou Shicong, Emmi Laine