A consortium comprising China Resources Land, Country Garden Holdings and China Merchants Industrial Zone Holdings bought the first piece of prime land near the center of Beijing at an auction at a rock bottom price. The consortium paid CNY3.84 billion for the parcel just outside Beijing’s southern second ring road, with 73,598 square meters of gross floor space. That translates to a price of CNY52,175 per sq m, which provides little room for profit once other costs are factored in. The result is a remarkable outcome in the first auction in five years in Dongcheng, one of two districts within the capital’s former city walls, considered prime land. Auctions within the second ring road have been very rare in recent years, while most new land sales had occurred outside the fifth ring road. Three bidders had been in negotiations with each other before bidding began, but two backed away, leaving the consortium to win with little effort, according to anonymous sources. Bidders had to put down a cash deposit of CNY1.15 billion, which may also have deterred some companies from taking part in the auction. The fact that the parcel must be developed separately into residences and commercial space instead of en bloc may also have been a deterrent. Dongcheng’s authorities imposed stringent conditions on the land before the auction: at least 70% of homes built on the land must be smaller than 90 sq m in size, selling for no more than CNY89,068 per sq m on average. At least half of the commercial space should also be held for lease for 20 years. The last time Dongcheng district put residential plots up for sale was in 2012, when a site near Dongzhimen was sold at CNY25,750 per sq m. Prices on that same site have soared to CNY140,000 per sq m.