(Bloomberg) -- A $1.8 billion project by defaulted Chinese developer Shimao Group Holdings Ltd. failed to find a buyer at a forced auction, underscoring the lack of investment appetite amid a weakening economy.
No buyers bid for a land portfolio spanning an area equivalent to 34 football fields, even though the asset was offered at a price 20% lower than its appraised value, according to results posted on online auction site JD.com.
Investors have become more cautious about acquisitions after the country's real estate sector failed to sustain a recovery. Globally, commercial property markets from New York to Hong Kong are struggling due to a fragile economic outlook and work-from-home preferences.
Read more: China's Distressed Debt Woes Mount With State-Backed Sino-Ocean
Last week, China's second-largest developer by sales China Vanke Co. said the nation's home market is “worse than expected,” joining a chorus of investors and analysts who have become bearish on the real estate sector. Goldman Sachs Group Inc. now projects a higher default rate for Chinese high-yield property dollar bonds.
Shimao's onshore commercial property unit purchased the land in 2017 for 24 billion yuan ($3.3 billion), a record in Shenzhen at the time. Its original plan was to build a landmark complex with a 500-meter skyscraper known as the Shimao Shenkong International Center. The project ran into trouble last year after the company missed some payments on high-yield trust products used to raised money for the construction.
Citic Trust Co., which manages the trust project, seized the asset and sued Shimao's unit, according to the auction documents and Shimao's company filing.
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