Although the supplies put on the market over the past couple of months may go some way towards quenching developers' thirst for land, experts believe that this is still not enough to satisfy the massive need for decently priced plots in good locations.

"Land supply has reduced since 2001. Though the government has increased land supply over the past two months, it is still less than market demand," said Jim Yip, director of the investment department at the Shanghai Office of Debenham Tie Leung (DTZ), a leading international property consultant.

According to Gong Min, a senior property researcher at Centaline Property Agency's Shanghai office, "this year's publicly traded land supply is very likely to be less than that of 2005 and 2004."

Last year, 125 plots of land, measuring 697 hectares, were sold through open bidding, while 81 plots of land covering 490 hectares were publicly traded in 2004.

"This year's shrinking of the land supply via open bidding is probably due to the influence of the central government's macro-control measures, including tighter restrictions on land usage and the stricter regulation of open bidding," said Gong.

In 2002, the central government introduced public trading for commercial land for retail, tourism, entertainment and residential purposes.

"The traditional practice of trading commercial land privately through contracts between the government and developers has gone," said Zhang Xiaolong, a researcher at the Shanghai Office of Colliers International Property Services.

Since August 31, 2004, when all local governments were required to unconditionally adopt open trading for commercial land, supply shortages have surfaced and become common in major property markets such as Shanghai and Beijing.

This shortage has pushed up the bidding price for lots in good locations.

Last month, Shanghai witnessed a bid of almost 6 billion yuan (US$759.5 million) for a plot of residential land in the city's Pudong District.

"Non-local developers have a very great need for land in Shanghai, especially those located in downtown," said Yip.

1

2

3

(For more biz stories, please visit Industry Updates)