Flush with funds after a spurt in sales, many leading developers have again started to shop for land as confidence returns on signs that the housing market is stabilising. However, they will not pay excessively for sites because of high construction costs. "With cash resources from strong sales in past months, developers will be more active in entering the market than last year," said Simon Lo Wing-fai, an executive director at Colliers International's research and advisory division. The top five developers, Cheung Kong (Holdings), Sun Hung Kai Properties, Sino Land, New World Development and Henderson Land Development, together sold HK$44.8 billion of property in the first half, according to Centaline Property Agency. They are understood to have done even better in the past two months, when the market picked up more pace. Cheung Kong has said it sold HK$19 billion worth from the beginning of the year to the middle of last month. The extra cash is beginning to affect land acquisitions and leading developers, which have shunned government auctions since last year, when home sales fell because of fears interest rates would rise, are back in the hunt. Of the 68 sites tendered by the government, MTR Corp and the Urban Redevelopment Authority since last year, Sino Land got three, Henderson and Swire Properties bought one each and New World and China Vanke jointly bought one. Cheung Kong made no purchase, leaving only SHKP and Wheelock Properties as the two big developers in the market. Many sites were bought by smaller players including Wing Tai Asia, Nan Fung Development and Paliburg Holdings. Several sites were withdrawn as most big players seemed uninterested. The tender for a site in Pak Shek Kok, Tai Po, was pulled in March and was offered again in May. It was snapped up by Great Eagle Holdings at nearly half the price at which nearby sites were sold in 2007. Sino Land was now looking for large acquisition opportunities while Henderson had also indicated it was interested in government sites, said Alfred Lau, an analyst at Bocom International, who recently met their managements. "The big developers have put in a lot of hard work to strengthen their financial health, such as keeping their gearing ratio at historical low levels and prepaying loans before their maturity to prepare for any increase in interest rates," said Joyce Kwock, an analyst at Credit Suisse. "As a result, they feel more comfortable in terms of risk of financing." Cheung Kong's gearing was 1.7 per cent in June while Henderson's was 3 per cent. Sino Land, long considered the most leveraged play on the residential segment, is sitting on a cash pile of HK$6.4 billion. "Sino Land is actively studying [and submitting tenders for] various land sites," Kwock wrote in a recent research report. It recently bid for the multibillion-dollar Kwun Tong redevelopment project and the Tsim Sha Tsui Middle Road government site. "Its strong financial position should mean more acquisitions on the upcoming land sale pipeline," Citicorp said in a note.