An 2,226-square-meter chunk of land designated for residential use in Zhabei District yesterday became Shanghai's first plot to sell at its starting price this year.

Per gross floor area, or GFA, the plot fetched 1.579 billion yuan (US$233 million) or about 12,000 yuan per square meter, a reasonable price according to industry analysts.

Two state-owned developers acquired the plot in the city's north, which attracted few bidders at the auction.

"It is no surprise that state-owned companies obtained the right to develop that plot," said Sky Xue, an analyst with China Real Estate Information Corp. "Private developers seldom involve themselves in projects that include many provisory requirements such as the Zhabei piece, while state-owned companies, which usually have good relations with the government, are perfect bidders for such developments."

As stated by the city's land authority, developers that acquire the land are required to build a wet market with a GFA space of 2,000 square meters, a kindergarten, some community medical facilities as well as public green spaces at their own cost and hand them over for government use upon completion.

Plus, 20 percent of the homes built on the land should be apartments smaller than 90 square meters.

At the moment, new homes in the neighborhood sell for as much as 28,500 yuan per square meter, industry analysts said.

In the first half of this year, 1.27 million square meters of land designated for residential use, excluding plots for relocated residents under urban redevelopment plans, was auctioned by the Shanghai Municipal Bureau of Planning and Land Resources.

It represented a year-on-year drop of 24 percent, according to Shanghai Centaline Property Consultants Ltd.

Between January and June, the city's publicly auctioned land plots designated for residential use sold for an average of 91 percent above the asking price, according to Centaline's research.