For a while it seemed that everybody in Guangzhou wanted to be the Land King of Pazhou. In March of last year, the city government announced an auction for a prime piece of land adjoining the city's new convention centre on Pazhou Island. The government took the bold step of setting the opening bid at a whopping 854 million yuan, an unheard of sum for a single plot as far as local auctions were concerned.
Undeterred, would-be developers bid 204 times during a marathon 90-minute auction. A weary auctioneer raised the bid increments from 2 million yuan to 3 million, then to 5 million before the hammer finally sounded on a winning tender of 1.38 billion yuan, hundreds of millions more than the city had made at any previous sale through public auction.
Local press heralded the winning developer as the 'Land King of Pazhou' - that was, until a few months later at an auction of a nearby plot, when an anonymous Beijing buyer tendered a bid equal to 6,223 yuan per square metre and set a separate local record for price per unit. Pazhou now had two land kings.
Or so it seemed. By January, neither party had produced the required initial investment, and the land bureau was forced to fine both and cancel their usage rights to the properties. The old land kings were dethroned.
By the time the Guangzhou government re-offered the land for auction in February, the market had cooled substantially. Both plots sold, but at a 357 million yuan discount to what the original bidders agreed to pay.
Land auctions on the mainland have come a long way in the two decades since the government gave up its role as the country's sole leaseholder. But as the example of the Pazhou land kings shows, the state's monopoly grip on the release of land for development still paves the way for market distortion.