Eleven days after the new existing home policy was unveiled, real estate developers have started to make new calculations for land acquisition.
After the introduction of the new real estate policy on August 28, Li Yang has been keeping a close watch on the land markets of first-tier and second-tier cities. This investment expansion staff from a central state-owned enterprise found that the investment indicators commonly used in the past, such as location, floor area ratio, height limit and rate of return, seem to be insufficient to explain the results of several recent land auctions.
On August 31, Shanghai transferred two residential-related land plots. The Zhenru plot in Putuo District, located between the Inner Ring Road and the Middle Ring Road, was sold at the reserve price of 15.019 billion yuan; the Sijing plot in Songjiang District, located in the suburbs with a floor area ratio of 1.2, was sold at about 582 million yuan after 29 rounds of bidding, with a premium rate of about 16.4%.
On September 3, Beijing originally planned to transfer two residential-related land plots. Plot No.45 of Wenyuhe in Shunyi District, located between the Fifth Ring Road and the Sixth Ring Road with a residential floor area ratio of 1.01, was sold at 8.2993 billion yuan after 174 rounds of bidding, with a premium rate of about 17.37%; Plot No.44 of Jiangtai in Chaoyang District, located within the Fifth Ring Road and adjacent to Wangjing, suspended its transfer.
The two land auctions once gave people the impression that suburban low-density plots are more favored by real estate enterprises. On September 8, Plot No.47 of Songzhuang in Tongzhou District, Beijing broke this judgment. This plot has a floor area ratio of 1.05 and a height limit of 18 meters, with indicators similar to those of the Wenyuhe plot, and was finally sold at the reserve price of 996.2 million yuan.
A series of policies introduced around August 28 involve adjustments to systems such as commercial housing sales and real estate credit. For real estate enterprises participating in the bidding, the value of a land plot not only depends on how much the houses can be sold for, but also takes into account the investment in land acquisition and construction as well as the investment return period.
"The original investment standards can only explain part of the situation, not all of it," Li Yang said.
Bidding Up and Stopping Bidding
Both the Jiangtai plot in Beijing and the Zhenru plot in Shanghai have good locations, and their common feature is high total price. The starting price of the Jiangtai plot in Beijing is 7.521 billion yuan; the Zhenru plot in Shanghai was acquired by China Overseas at the reserve price of about 15.02 billion yuan.
The Songjiang plot in Shanghai and the Wenyuhe plot in Beijing are both located in the suburbs with low floor area ratios, but their starting prices are vastly different. The starting price of the Songjiang plot is 500 million yuan, and the starting price of the Wenyuhe plot is 7.071 billion yuan. Both plots were sold at a certain premium after multiple rounds of bidding.
Among them, the Wenyuhe plot in Beijing is close to the Central Villa District, with many international schools distributed around it. In 2025, the Runyu Yuan project developed by China Resources Land after acquiring land in the same area has a net signing rate of over 86% so far, with an average net signing price of 72,000 yuan per square meter. The floor price of the Wenyuhe plot won by China Resources Land this time is about 40,000 yuan per square meter.
Li Yang believes that although the Wenyuhe plot has good market expectations, its total price is high, and the investment recovery period has been extended after the introduction of the new policy, so not all real estate enterprises have the ability to participate in the bidding and make continuous offers. The 174 rounds of bidding for the Wenyuhe plot mainly took place between two bidding entities.
The land market in Guangzhou presents another situation. On September 4, the Daguang Road plot in Tianhe District located in the core area was opened for bidding, attracting four enterprises including Yuexiu, Poly, Zhu Shi and Tianhe High-tech to register. Finally, Yuexiu Properties won the plot at 2.481 billion yuan, with a premium rate of 15.88%.
Cities such as Hangzhou, Chengdu and Xi'an mainly see transactions with low total prices. On August 29, Xi'an completed the transaction of 7 residential land plots, and only 2 of them had a total transaction price of over 1 billion yuan; on September 1, a residential plot with a floor area ratio of 1.5 in Donghu New Town, Linping, Hangzhou was sold at about 286 million yuan; on September 3, Chengdu completed the transaction of two residential land plots, with total prices of 320 million yuan and 69 million yuan respectively.
More than ten days after the introduction of the new policy, the land market is unevenly hot and cold. Li Yang said that there are limited referable samples in the land market, and the current transaction results are not enough to support real estate enterprises to form new land acquisition strategies, but existing cases show that the supply and demand differentiation between different cities and different plots is continuing.
Some high-quality plots with high total prices and good market expectations have further raised the requirements for capital strength. After the introduction of the new policy, real estate enterprises pay more attention to cash flow security, the number of enterprises that can participate in the competition for such plots has decreased, and the ability and willingness of the same real estate enterprise to continuously participate in the competition for high-total-price plots are also restricted, so the demand for high-total-price plots in the land market may decline accordingly.
The Zhenru plot in Putuo, Shanghai has a total price of 15.019 billion yuan, with a total floor area of nearly 400,000 square meters, of which the residential proportion is nearly half. With such a large capital investment, there are destined to be not many real estate enterprises that dare to place a bet. It is difficult to recover all the investment at one time only by residential sales, and part of the income needs to be realized through subsequent commercial and office operation.
Plots with low total price and low floor area ratio have relatively low capital thresholds, which are easier to attract real estate enterprises to participate, and other capitals for asset allocation needs will also get involved. Li Yang judges that in order to reduce the total price of a single plot, some cities may split large plots for transfer in the future.
However, small-scale projects do not mean easy de-stocking. The market for rigid demand and mid-end improved housing is fiercely competitive. For customers of low-density residences, in addition to the product itself, they also value the region, customer group and supporting facilities.
A regional head of a real estate enterprise told The Economic Observer that the overall activity of the land market is lower than in the past, the number of entities participating in the bidding has decreased, and even if they participate in the bidding, they will make offers more cautiously. After the introduction of the new policy, they will still participate in the bidding for some high-quality plots, but most of the time they are in a wait-and-see state, and few of them hold the mentality that they must win the bid.
Change and Invariance
The above-mentioned regional head of the real estate enterprise said that after the introduction of the new policy, the land transfer rules themselves have not changed much, and even the contract templates have not been updated. What has really changed is the capital operation mode of projects. Real estate enterprises need to invest more self-owned capital, and the sales payment collection cycle has also been lengthened.
In accordance with the Notice on Improving the Commercial Housing Sales System, whether a project applies the new rules or the old rules is determined by whether the construction permit has been obtained when the document takes effect. For projects that have already obtained construction permits, the pre-sale and capital supervision shall apply the old rules; for projects that have not yet obtained construction permits, the new rules shall apply.
Up to now, most cities have not yet issued corresponding implementation rules, but the new capital supervision rules have taken effect. For projects applying the new rules, they need to apply for pre-sale after the main structure is capped, and the node for obtaining sales payment is also postponed accordingly.
This means that when acquiring land, real estate enterprises need to not only calculate the land payment, but also prepare more funds for subsequent construction; they need to not only judge whether the project can be sold, but also calculate when the funds can be actually recovered. The weight of cash flow and capital scheduling capability in investment decisions has increased.
The above-mentioned regional head of the real estate enterprise said that obtaining the pre-sale permit, signing the house purchase contract and receiving the mortgage funds do not occur at the same construction node, and the payment that can be formed in the early stage is limited. During the period from the capping of the main structure to the completion of the filing for completion, expenditures such as project payments, material payments and decoration still need other funds to continue.
After the main structure is capped, the project still has large capital expenditures. In addition to the subsequent project construction, it also includes large supporting facility fees and related taxes. If the sales payment is insufficient, real estate enterprises need to supplement funds through other channels.
Capital constraints directly affect land acquisition choices. Li Yang believes that in the future, only a few real estate enterprises will be able to continuously undertake high-total-price and large-scale projects, and more enterprises will actively choose low-total-price and small-scale projects.
An investment head of a real estate enterprise told The Economic Observer that the enterprise's investment portfolio usually needs to take into account both strategic projects and turnover-type projects. The market certainty of large-scale projects in the core area is relatively high, and the investment is also larger; turnover-type projects emphasize capital efficiency, with the land price usually at about 1 billion yuan, the project scale no more than 500 units, preferably 200 to 300 units, and the de-stocking cycle controlled within two years.
Product form will also affect the capital cycle. The construction cycle of high-rise residences is longer, and the payment collection node is postponed accordingly; the construction period of low-rise residences is relatively shorter. This is also one of the reasons why some plots with low floor area ratio have attracted the attention of real estate enterprises.
For real estate enterprises, the quotation for land acquisition needs to be calculated in the overall capital pool. If the selling price remains unchanged but the payment collection is postponed, capital occupation and interest expenditure may increase; extending the loan term and promoting the project in stages can alleviate part of the pressure, but the project turnover cycle will also be lengthened.
For the same land plot, the capital amount, financing conditions and development experience that different real estate enterprises can invest are different. The capital recovery period acceptable to one enterprise may have exceeded the tolerance range of another enterprise; even if the expected selling price is the same, different construction costs and sales progress will form different upper quotation limits in the land market.
Stock Account Book
In addition to new investments, real estate enterprises also need to rearrange the land they have previously acquired. For enterprises that acquired high-total-price plots recently, subsequent land payments, project construction funds and new investment demands may be concentrated in the same stage.
A person from a medium-sized real estate enterprise told The Economic Observer that before the new policy on August 28, his company acquired a strategic investment project with a high land price. After the introduction of the new policy, for the needs of cash flow management, the company plans to introduce strategic investors for the project. If it develops independently, it will not only restrict future investment, but also put the entire group in danger.
Before the new policy, high-total-price plots were not uncommon. In August alone, the transaction price of the Nanmofang plot in Beijing was 8.399 billion yuan, and the transaction price of the Sijiqing plot was 9.761 billion yuan; the transaction price of the Pazhou Shiliugang plot in Guangzhou was 8.056 billion yuan; the transaction price of the North Bund plot in Hongkou, Shanghai was 3.845 billion yuan.
After the introduction of the new policy, the calculation methods for project payment recovery and income have changed, and enterprises need to re-evaluate the cash flow occupation of these projects. Introducing cooperative funds can reduce the capital pressure of a single real estate enterprise, but when the cooperative party enters, how much investment it shares, and who undertakes the additional investment obligation during the construction period will all affect capital occupation, and the project income will also be redistributed with the equity.
Li Yang believes that projects that have acquired land before the new policy but have not yet started construction are in an awkward situation. When such projects acquired land, the income was calculated according to the original investment model, which may still maintain a small profit under the current market environment; after the payment collection and financing conditions change, the original calculation needs to be recalculated.
For development enterprises, both continuing development and choosing to return the land will cost money. Especially for high-total-price and large-scale projects, after the payment collection cycle is extended, the profit of the previous phase may be swallowed up by the cost of the next phase.
The new policy does not prohibit pre-sale, nor does it force all projects to implement existing house sales, but the pre-sale conditions and capital supervision rules have changed. Even if pre-sale continues, investment return, payment collection cycle and cash flow are still variables that real estate enterprises must recalculate.
Before the implementation of the new rules, affected by factors such as the market downturn, the proportion of existing house transactions in new house transactions has exceeded 30%. Some home buyers are worried that the projects will be unfinished and the prices will drop when the off-plan houses are delivered, so they prefer to choose existing houses when buying houses. Even if the local implementation rules do not force existing house sales, when off-plan houses and existing houses compete on the same stage, the certainty of delivery will become an important consideration for home buyers.
The above-mentioned person from the medium-sized real estate enterprise said that with the launch of "high-quality house" projects, such projects have improved in floor area ratio, floor height and supporting facilities compared with old products, which once made some off-plan houses have product advantages over the stock existing houses. As the gap between the old and new building standards gradually narrows, this advantage may also weaken.
Li Yang told The Economic Observer that for the transferred land that has not yet started construction, in addition to relaxing the conditions for introducing investors, some local governments are also considering further optimizing land conditions, such as removing part of the public supporting facilities from the project or adjusting the transfer price, but there is no clear information at present.
This article is from the WeChat official account "The Economic Observer", author: Tian Guobao, published with authorization from 36Kr.