By staff reporter Zhang Yingguang

A cloud has been hanging over Beijing's market for undeveloped land since the beginning of the year. Statistics from the Beijing Land Arrangement and Reserve Center shows the Chinese capital has closed deals on only six plots of land for industrial use since February. And only one plot successfully traded hands in April.

What's happening in otherwise booming Beijing reflects a real estate trend for much of China: Since October, the national market for undeveloped land has experienced a downturn.

Experts blame the government's stricter land-control measures and tighter credit for the slowdown. In addition, many developers are facing a shorter capital chain after speculatively expanding their land holdings last year.

Nationwide, 40 land auctions failed between January 1 and the end of March. Some developers were simply unable to increase their land reserves, while others with adequate capital hesitated to buy, claiming prices were too high.

“Under current market conditions, the government will be quite cautious to put land on the market due to concerns about the possibility of more failed bids,” one industry insider told Caijing. “On one hand, land-transfer fees are a major revenue source for local governments. On the other hand, control of land supply is important to curb surging housing prices.

“Although bidding for high-price land has been well regulated,” the insider said, “the sluggish land market also hurts the government.”

Beijing land center staffers told Caijing that the current, weak performance of the local market should be seen as a normal correction. They think the market will revive in May after more land plots are added to the bidding process.

Four plots for industrial use were offered for public bids May 5. The largest has a planned construction area of 197,000 square meters and an opening bid price of 366 million yuan.

So far, bids have been received for three of the four plots, Caijing learned, but these offers were below the required opening prices. Bidding is to close May 19.

Beijing planned to offer nearly 60 plots covering 6.2 million square meters in the second quarter. In addition to the four plots offered May 5, another six plots were to be offered for market transactions May 8-19.

1 yuan = 14 U.S. cents

Related Story:

Developer Wakes from Billionaire Dream
Shakeout Time for China's Land Developers
Property in 2008: How Long for the Real Estate Cool-Down?