Two pieces of residential land in Shanghai's northwest Jiading District were re-auctioned yesterday at lower prices after the previously successful bidders gave them up as they were cash-strapped.

Greenland Group paid 1.93 billion yuan (US$292 million) for the Zhennan land parcel, lower than the closing price of 2.42 billion yuan, the most expensive when the land was auctioned in early January. The floor price, cost to residents without considering construction costs, is expected to drop from 12,503 yuan to 9,774 yuan per square meter.

Experts estimated that home prices in the area will range between 19,000 yuan and 20,000 yuan per square meter if the land was sold at the original 2.42 billion yuan.

Three Shanghai-based developers bought the Bai'an parcel for 701 million yuan, about 400 million yuan less than what a Shenzhen firm paid in February. Its floor price is 5,252 yuan per square meter.

"The previous property developers withdrew because they were squeezed by tight funds under the tough policy to curb property speculation," China Business News said, quoting unnamed insiders.

The government unveiled plans for the re-auction on November 30, confirming rumors that the previous winners withdrew. It was the first time in Shanghai that land plots were returned because of tough measures implemented since April to curb speculation in the property market.

There was only one bidder for each auction because developers were put off by tough conditions for construction set by the local government.

Five percent of the total construction area has to be set aside for low price homes which should be sold at not higher than 60 percent of the project's average price.

Apartments not bigger than 90 square meters should be built in 35 percent of the construction area in the Zhennan land plot and 10 percent in the Bai'an parcel.