Urban land, generating returns from existing stock

On May 25th, the land use right of Building 1, Courtyard 18, West Beisanhuan Road, Haidian District, Beijing was sold at a price of 78.459 million yuan. The land area is 3,893 square meters, with a transfer term of 20 years. The winning bidder is Beijing Haidian Dazhongsi Agricultural, Industrial and Commercial Company (hereinafter referred to as "Dazhongsi Company").

This is not a traditional new land transfer but the revitalization of existing assets.

This project was originally part of Zhongkun Square. After the restructuring and renovation in 2019, it was renamed Dazhongsi Square. The upper part is an office building, and the lower part is a commercial street. This time, Dazhongsi Company adjusted the land use nature to commercial and financial land by paying the additional land transfer fee. The government obtained 78.459 million yuan in land revenue.

For a long time in the past, local land revenue mainly relied on the transfer of new construction land. As the real - estate market entered the stock stage, the new development space in first - and second - tier cities gradually narrowed, and local governments began to look for new sources of land revenue from existing assets.

Since 2022, in many cities such as Beijing, Shanghai, Shenyang, and Hefei, there have been cases of converting allocated land to transferred land, adjusting the use of existing properties, and changing the nature of historical buildings for transactions. Although there is no new land supply, methods such as changing land use and paying additional land prices can still bring revenue to local areas.

In the past, due to the nature of allocation, use restrictions, or complex property - right structures, a large number of office buildings, industrial properties, and assets of government agencies and institutions formed during the previous urban expansion cycle were difficult to enter the market for transactions. As the secondary land market gradually improves, existing properties are beginning to re - enter the market through methods such as transfer, change of nature, and adjustment of use, and the asset transfer channels in urban renewal are further opened.

A person from the local natural resources system told Economic Observer that currently, there are mainly two situations for obtaining land revenue from existing assets: one is that the actual use of real estate no longer meets the new catalog of allocated land use, and the land use needs to be re - adjusted; the other is that when the property on the original allocated land is traded, the land acquisition method needs to be changed from allocation to transfer.

Seek Revenue from Existing Assets

The Dazhongsi project is not an isolated case. In the past two years, the situation of "obtaining land revenue without selling land" has appeared in many cities. During the process of adjusting the use or conducting property - right transactions of existing properties, the land users need to pay additional land prices to the government. This fund has a special item in local finance, that is, the "additional land price" in land transfer income.

In early 2026, the "Shilu" project at No. 61, Pinghai Road, Hangzhou adjusted the land nature from allocated land to transferred commercial land. The land area of this project is 642 square meters, and the building area is 1,036 square meters. The property owner, Hangzhou Urban Construction Investment, paid an additional 27 million yuan in land transfer fees for this.

In March 2026, the Administrative Service Center of the Anhui Provincial Department of Science and Technology applied to adjust the use of part of the office and teaching land at the east end of the south building of the comprehensive building at No. 116, Datong Road, Yaohai District, Hefei to commercial and financial land and paid an additional 225,000 yuan in land transfer fees.

At the end of 2025, the allocated land and the above - ground buildings of the plot at No. 192, Nanjing North Street, Heping District, Shenyang were traded. The Stomatological Hospital Affiliated to China Medical University obtained the project at a price of 121 million yuan. The land area of the project is 4,591.5 square meters, and the above - ground building area is 19,078.28 square meters. The land use nature is medical and health land.

This plot is adjacent to Shenyang Zhongshan Square and the Stomatological Hospital. In 1997, it was allocated by the Shenyang Municipal Government to the Liaoning Branch of the People's Bank of China, and the land use nature was institutional and group land. In November 2025, the Shenyang Natural Resources Bureau re - issued the planning conditions and adjusted the land use from commercial land to medical and health land.

In Shanghai, according to the announcement of Yuyuan Co., Ltd., 12 historical buildings under its name in Yuyuan Sub - district, Huangpu District, could not be used for mortgage and market transactions for a long time due to the nature of allocated land, and the asset value was difficult to release. Therefore, the company decided to change the nature of the land of the relevant buildings.

In early 2024, Yuyuan Co., Ltd. paid an additional 190 million yuan in land transfer fees for the first batch of 8 historical buildings and adjusted the land use to commercial and office use. In July of the same year, Yuyuan Co., Ltd. paid a total of 705.5 million yuan in land transfer fees and obtained the transfer property certificates for the 12 buildings.

The above - mentioned person from the local natural resources system said that currently, "seeking revenue from existing assets" has been gradually promoted in most cities. This not only means a change in the source of land revenue but also means an adjustment in the land supply channels.

Different Calculation Methods

In 2019, the General Office of the State Council issued the "Guiding Opinions on Improving the Secondary Market for the Transfer, Lease, and Mortgage of Construction Land Use Rights", which clearly stated that after the transfer of construction land use rights obtained by allocation, if the use conforms to the "Catalog of Allocated Land Use", no additional land transfer fees need to be paid; if it does not conform, on the premise of meeting the planning conditions, the transferee shall pay the additional land transfer fees in accordance with laws and regulations.

Currently, the additional payment standards vary in different cities, different projects, and different land uses.

Yuyuan Co., Ltd. paid more than 700 million yuan in additional land transfer fees for the 12 historical buildings, and the Dazhongsi project in Beijing paid 78.459 million yuan in additional land transfer fees.

In March 2025, Shouchuang Huaye adjusted more than 4,000 resettlement houses in 6 plots in Tuanhe area, Daxing, Beijing to commercial housing and paid a total of 95.752 million yuan in additional land transfer fees. The total residential building area of the 6 plots involved in the adjustment is 131,000 square meters, and the equivalent additional floor price is about 730.9 yuan per square meter.

Four sets of residential houses of the Anhui Branch of the People's Bank of China at No. 143, Anqing Road, Hefei, with a total building area of 299.34 square meters, paid a total of 950,000 yuan in additional land transfer fees, and the equivalent floor price reached 3,173.9 yuan per square meter.

The above - mentioned person from the local natural resources system said that the actual situation in operation is much more complicated than the provisions in the document. When the land use of a project is adjusted, in essence, the difference between the land values before and after the change is paid. However, not all projects are suitable for making up the difference completely according to the market appraisal price.

Some properties were formed earlier, with complex property - right relationships, or are located in the core urban areas. If the additional payment is made completely according to the market price, the cost may far exceed the affordability of the holders. For example, the additional payment cost of hundreds of millions of yuan for the 12 historical buildings of Yuyuan Co., Ltd. is obviously beyond the reach of ordinary market players.

Therefore, some localities will charge land transfer fees in a fixed - ratio manner in actual operation. For example, if the land transfer fee is charged at 1% of the total housing transaction price, for a resettlement house with a transaction price of 1 million yuan, the additional land transfer fee will be about 10,000 yuan.

Overall, the additional payment cost for commercial and office properties is usually higher than that for residential properties. This differential treatment reflects the practical considerations of local governments in revitalizing existing assets.

Diversified Channels

As early as 1993, the central government proposed to "strengthen the management of the secondary land market" and for the first time clarified the institutional space for transactions such as the transfer, lease, and mortgage of land use rights between market players outside the primary land market.

In 2013, the Third Plenary Session of the 18th Central Committee proposed to "improve the secondary market for land leasing, transfer, and mortgage". At that time, the reform of rural land entering the market was in the process of promotion, and many places regarded it as an important direction to promote the circulation of land elements and revitalize existing land resources.

In 2017, the former Ministry of Land and Resources issued the "Pilot Plan for Improving the Secondary Market for the Transfer, Lease, and Mortgage of Construction Land Use Rights" and carried out pilot projects in 34 cities and counties across the country to try to solve problems such as unclear transaction rules, non - standard platforms, and information asymmetry.

In July 2019, the General Office of the State Council officially issued the "Guiding Opinions on Improving the Secondary Market for the Transfer, Lease, and Mortgage of Construction Land Use Rights", and the institutional framework of the secondary land market was basically established.

At that time, the real - estate market was in an upward cycle, and new construction land was still the mainstream in the market. The secondary land market did not receive much attention.

After 2020, localities such as Ningxia, Chongqing, Jiangsu, Shaanxi, Fujian, and Jiangxi successively issued implementation opinions. Among them, Jiangsu included the secondary land market in the key reform tasks.

In 2021, Beijing issued an implementation opinion. In September of the same year, the Beijing Municipal Commission of Planning and Natural Resources listed the Pinggu Sports Comprehensive Service Center as a pilot project. The original use of the project as recorded in the certificate was cultural and entertainment land, and it was later adjusted to commercial land. In June 2022, the project completed the transaction in the Beijing secondary land market, and the government achieved 37 million yuan in land revenue.

Since then, most first - and second - tier cities have successively issued municipal implementation opinions, and the promotion rhythm and policy focus of different cities are also different.

Shanghai specially issued the "Administrative Measures for the Secondary Market of the Transfer, Lease, and Mortgage of Shanghai Industrial Land Use Rights", which is behind the large - scale demand for the renewal of inefficient industrial land formed during the process of industrial upgrading. Cities such as Nanchang and Qingdao have further issued secondary - market management measures on the basis of the implementation opinions. Many other cities are still at the stage of implementing in principle.

A person who participated in the formulation of the pilot plan for the secondary land market told Economic Observer that when promoting the construction of relevant systems back then, a more long - term goal was to gradually break the single dominance of local governments in land resource allocation. According to the original plan, after the secondary market for state - owned construction land matures gradually, in the future, the use rights of collective construction land, homesteads, and even some rural land may also be gradually included in the unified trading system.

This article is from the WeChat public account "Economic Observer". Author: Tian Guobao. Republished by 36Kr with authorization.