Beijing launches new land auction system

Beijing's municipal government has launched a new land auction system to avoid unsuccessful sales of sites. The move comes as land sales fizz around the country.

The new auction system means developers offering the highest price will get the land they're bidding for. At the moment, under a system introduced in 2006 to cool the soaring property market, price only accounted for 30 per cent of the criteria. Other factors including the strength of developers were also taken into consideration.

Although the system to some extent limited speculation, it took longer to evaluate sales, often resulting in unsuccessful auctions. The new system is expected to increase price transparency, and shorten the land sale cycle to improve efficiency.

Zhang Kunyu, Centaline Property said "The current land market is red hot, the new policy aims to regulate the market, to restore order to the market."

The first auction using the new system will be held before the end of this year. So far this year, Beijing municipal government has sold 220 sites for commercial use, with total sales reaching 64 billion yuan. Land prices are setting records as the property market rebounds strongly. Industry opinions are mixed on whether the new system will work to stabilize land prices or do the opposite.