(Yicai) Dec. 21 -- A plot of land in Shenzhen’s Nanshan district failed to attract a single bidder yesterday, despite its cash-strapped owner offering the parcel at a 24 percent discount to what it paid just two and half years ago. 

The plot was up for auction on Chinese e-commerce giant JD.Com’s judicial auction platform at a starting price of CNY5.3 billion (USD741.5 million).

China’s property market was very different when the plot was first offered for sale in May 2021. The market was booming back then. It had a starting price of CNY4.8 billion, and after 195 rounds of heated bidding, Hong Kong-listed developer Logan Group won out.

The value of the land reflects the changing market landscape over the past two years, as well as the aggressive business dealings of some market players such as Logan at the market’s peak, which led them into trouble eventually.

The main reason for yesterday’s failed auction was the too-high starting price, a project investor at a Shenzhen-based real estate company told Yicai. Based on the types of project the government wants developed on the land, it would be very hard to make a profit even if a developer paid just CNY4.8 billion, the starting price for the 2021 auction, so his firm passed on it at the time, he said.

His concerns were born out. By March this year, development of the plot was suspended, with only 5.8 percent of the initial target reached, while Logan was already in deep financial trouble.

A court seized the land and put it into judicial auction because Logan failed to repay debt to a trust company. Logan had mortgaged the land shorty after it won the bidding in 2021 to raise CNY5 billion to finance two other projects, but when the debt came due, the Shenzhen-based developer could not cover it.

Logan also defaulted on five US dollar-denominated bonds in August. The company is restructuring its offshore debt, but the plan has not been made public.

Editors: Tang Shihua, Futura Costaglione