A subsidiary of Poly Real Estate yesterday won Shanghai's first land auction in 2010 after it agreed to pay nearly 730 million yuan (US$106 million) for five plots that came in three packages in Jiading District and to build a 700-million-yuan theater for the government.

The land, covering 151,600 square meters, was also the third acquisition made by the developer in the same area in less than two months.

The land plots were finally sold to Poly at 2 million yuan above the starting price.

Under one of the requirements to bid for land, the developer will build a 50,000-square-meter theater, which will be handed over to related government departments without charge when it is completed.

The five plots sold yesterday are designated for residential, commercial, including office and retail, as well as cultural and entertainment uses, according to earlier documents on the Website of Shanghai Urban Planning, Land and Resources Administration Bureau.

"It is quite a good strategy for Poly to acquire three packages of land in Jiading as it will enable the company to master plan the community as a whole and therefore raise the quality of its projects," said Lu Qilin, a researcher at Shanghai Uwin Real Estate Information Services Co. "Moreover, the developer might also be able to reduce some development costs if it has several projects in the same area."

Also yesterday, the real estate arm of Shanghai Baohua Group acquired a 79,165-square-meter land parcel in Jiading for nearly 2.42 billion yuan, or about 12,500 yuan per square meter, in the second auction after beating more than 10 rivals.

The starting price for the land, designated for residences, was only 544 million yuan, or 2,190 yuan per square meter.

"The final high price of the land indicated developers continued to feel optimistic about the local housing market," said Xue Jianxiong, an E-House (China) Holdings Ltd analyst. "Apartments built on the plot will certainly sell for more than 20,000 yuan per square meter."