(Yicai) April 22 -- As Beijing’s property market begins to regain its footing, the rebound is now spilling over into the land auction market. A residential plot sold yesterday marked the capital’s first premium-priced land sale of the year.

After fierce bidding among five real estate developers, the plot was ultimately secured by China State Construction Engineering Corporation Land, or C-Land, for CNY1.3 billion (USD194.1 million), an 8.7 percent premium on the starting bid.

The land parcel is located in the core residential area of Yinghai in Yizhuang New Town, adjacent to Yinghai Station on Beijing’s Metro Line 8, providing a good transportation link for an upscale housing development, said Zhang Kai, head of land market research at China Index Academy, a leading think tank.

More importantly, no new residential land has come on the market in the surrounding area for nearly three years, Zhang said. That, coupled with a severe shortage of high-quality housing in the area, gave C-Land a window of opportunity, he added.

In addition to good transportation, the plot boasts established amenities, including large commercial complexes, and its proximity to parks and rivers contributes to a pleasant living environment, according to a report by China Real Estate Information Corporation, a leading industry data provider.

This auction shows that plots can be sold at a premium in Beijing if they are in good locations, have surrounding amenities, and have manageable risks, Zhang pointed out. The market is not lacking in liquidity, it just has higher requirements on the long-term value of targeted land, he said.

Beijing’s new home sales almost tripled by area to about 432,300 square meters last month from February, while second-hand house sales rose 3.4 percent. There were also signs that prices have started to stabilize.

The property market’s recovery will continue to provide fundamental support for the city’s land market, the CRIC report noted. This is expected to boost developers’ confidence in buying land, lift overall activity, and give the government scope to gradually increase the supply of high-quality plots.

Editors: Tang Shihua, Futura Costaglione