(Yicai) April 17 -- Shanghai raked in CNY25.3 billion (USD3.5 billion) from the sale of 11 tracts of land in the year’s first land use rights auction that was split into two rounds, one that was held last month and one yesterday, as the city’s real estate remains greatly prized by developers.

State-owned developer Yuexiu Property outbid eight other contenders for a highly sought-after piece of land in downtown Jing’an district yesterday with an offer of CNY1.6 billion (USD221 million), 10 percent higher than the reserve price, and costing around CNY78,197 (USD10,802) per square meter.

Other government-backed real estate firms that secured land were XMXYG Corp., which paid CNY3.9 billion (USD538.7 million) for two land parcels, Poly Developments and Holdings Group, C&D, Xiamen ITG Group Corp and Huafa Group.

Private developers, such as Longfor Group Holdings and Dahua Group, also successfully bid for land use rights in Shanghai for the first time since the last auctions in December last year.

These are the first land auctions to be held since Shanghai eased standards for residential buildings which allow developers more leeway with the design of apartments, including increasing their size, industry insiders said. But, overall, real estate firms remained wary.

The Jing’an district plot is popular because it only yields a small floor area of around 20,000 sqm, so that developers can sell these properties quickly, said Lu Wenxi, an analyst at Shanghai Zhongyuan Real Estate Consulting.

The second auction round was not as well attended as the first one as the property market has yet to fully recover, said think tank China Real Estate Information Corporation. Real estate sales in March, normally a peak month, were tepid with the floor-area sold slumping 20 percent year on year to 750,000 sqm. Thirty-five new projects came on the market that month and around half of their properties were sold.

Plots in Shanghai are still highly prized, an insider at a developer that secured land in the second auction, told Yicai. Everyone values the east China market, and there are many developers from outside the city vying for land in Shanghai, the person added.

Editors: Shi Yi, Kim Taylor