LAST year, China’s more aggressive property developers were willing to pay whatever it took to secure land banks, but today, China is seeing a surge in failed land auctions.

The trend has been especially noticeable in bigger cities since July as developers face reduced liquidity and thinning margins due to a prolonged tightening of government policy and a weaker macroeconomic environment.

On a single day this month, Jinan, a second-tier city in Shandong Province, saw eight plots of land go unsold at auction, 10 parcels change hands at the reserve price and one plot sold for a premium of less than 4 percent.

The second-tier city of Taiyuan in Shanxi Province aborted eight auctions Aug. 10 in what was expected to be its largest land sale in years, as bidding prices for two parcels failed to meet the minimum requirement and there were no bids for the other plots.

These were not isolated incidents.

The number of failed land auctions more than doubled in the first seven months of this year to 796 from a year earlier, according to realtor Centaline, with major cities recording the highest number since 2015, and smaller cities posting a record.

Research from investment bank CICC showed the proportion of failed auctions climbed to 9.4 percent in the first three weeks of August, compared with 7.3 percent over the whole of July.

Despite the spike in the number of failed land auctions, property investment growth accelerated in July at its quickest pace in nearly two years, official data showed. (SD-Agencies)