Local governments in mainland China are speeding up their purchases of idle land from developers, but more cities need to take part to expand the scale of the initiative and rescue the property market from its five-year slowdown, according to analysts.
Several cities in China’s southern Guangdong province last week unveiled plans to buy idle land totalling more than 35 billion yuan (US$4.8 billion) from developers via special bond issuances – the first such move since authorities announced the scheme to address the residential land glut in October.
The plans involve more than 160 plots of land, measuring 6.8 million square metres, as of February 11, and the price works out to or 5,147 yuan per square metre, according to data compiled by think tank China Index Academy.
“The bulk purchase officially kicks off buying of idle and raw land through issuance of local government special bonds in 2025, and we expect more cities to join the ranks,” said Yan Yuejin, vice-president of Shanghai-based E-House China Real Estate Research Institute.
The initiative was expected to help equalise supply and demand in the land market as well as provide cash flow for developers, reducing their financial burdens and stabilising their operations, he added.
The land plots are being sold for less than developers paid for them. In the vast majority of cases, the purchase price is 80 per cent or less of what the developer paid, according to China Index Academy.
China’s property sector, which once accounted for a quarter of the economy, suffered a deep slide in sales and prices starting in late 2020, when Beijing’s “three red lines” policy limited developer borrowing, leading to construction halts and an unprecedented number of defaults. Later the Covid-19 pandemic further dampened sales.