(Yicai Global) June 2 -- Beijing’s second land rights sale of the year secured CNY49.9 billion (USD7.4 billion) for the local government at an average premium of 5.4 percent, according to the latest auction data.

Of the 14 parcels of lands sold, seven were highly contested, with bidding premium rate reach as high as 15 percent. The bidding for one plot in Fengtai district in the south of the capital was so heated it had to be determined by drawing lots after the price rose to the upper limit. The other seven plots changed hands at their starting price and three remained unsold.

The auction results reflect the trend of the entire land market that, although still low, premium rates are going up and that there are less unsuccessful auctions, Guan Rongxue, an analyst at Zhuge Zhaofang Data Research Center, told Yicai Global.

The auction shows that confidence is growing in the Beijing real estate market, said Yue Wei, senior analyst at Beijing Lianjia Research Institute. Many land parcels on auction were in great locations, had low starting prices and there was less need to build supporting facilities hence the interest from developers.

Most of the participants, however, were state-backed companies indicating to a certain degree that the sector is still cash-strapped and that most developers are cautious when it comes to buying land, Guan said.

“Those plots that were unsold or sold at the offer price were usually in places without good supporting facilities or where real estate projects nearby did not sell well or were bound to commercial and other projects. This show that developers still favor land with good profit margins and short construction periods,” China Index Academy said.

Editors: Tang Shihua, Kim Taylor