(Yicai) Feb. 28 -- The first land auction held in Hangzhou, China’s eastern Zhejiang province, after the Chinese New Year holiday secured a total sales revenue of nearly CNY11.2 billion (USD1.6 billion).

The seven land plots that were auctioned yesterday in Hangzhou had a total starting price of CNY9.4 billion (USD1.3 billion), each achieving a transaction premium rate of between 13 percent and 25 percent.

After going through 44 rounds of bidding from 14 real estate developers, the most popular land at yesterday’s auction was sold at a premium of 24.4 percent.

The main reason for the land’s popularity among developers is that the government set its maximum sales price per square meter at CNY46,500 (USD6,460), which is 22 percent to 42 percent cheaper than the price per sqm of second-hand homes in the area, meaning that the new houses to be built on the plot will be quickly sold, Yicai learned. However, the high premium rate is expected to narrow developers’ profits.

The fact that all seven land plots were sold at a premium reflects the enthusiasm of real estate companies in Hangzhou and shows the high quality of the plots, Jian Shangguan, president of the Beike Research Institute, the research arm of China’s biggest realtor Ke Holdings, told Yicai.

The auction was mainly attended by leading real estate firms registered in Hangzhou, but some state-owned and small private developers also took part, Yicai learned.

Editors: Tang Shihua, Futura Costaglione