In recent months, there have been fewer takers for land sites on offer in some major Chinese cities.
Of 11 land parcels in Jinan, Shandong province, nine have failed to draw even the minimum asking prices at auctions, while two plots went to single bidders at bottom prices.
The sites had been zoned for residential and commercial use by the local government.
According to Xinhua News Agency, the failure of some sites to attract even minimum offers reflects the dire liquidity situation facing property developers. It added that a similar lack of response has been observed in Chengdu and Nanjing.
“Developers just don’t have enough cash,” said one analyst, who noted that they need at least two years to recover capital expenditure through property sales.
Given the current tight credit, property developers had believed that some sites would be much cheaper, the analyst added.
He predicts that the situation may continue until the second half of 2012, and “it could get worse if developers see a year-on-year drop in profits in the first half of next year.”
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