Economic Observer reporter Tian Guobao

After the new real estate policy was introduced on August 28th, Li Yang has been keeping an eye on the land market in first and second tier cities. This state-owned enterprise investment and development personnel found that commonly used investment indicators such as location, plot ratio, height limit, and return rate seem insufficient to explain the results of recent land auctions.

On August 31st, Shanghai sold two residential land parcels. The Zhenru plot in Putuo District, located between the inner and middle rings, was sold for a minimum price of 15.019 billion yuan; The Songjiang Sijing plot, located in the suburbs with a plot ratio of 1.2, was sold for approximately 582 million yuan after 29 rounds of bidding, with a premium rate of approximately 16.4%.

On September 3rd, Beijing originally planned to sell two residential land parcels. The Shunyi Wenyuhe 45 plot, located between the Fifth and Sixth Ring Roads with a residential plot ratio of 1.01, was sold for 8.2993 billion yuan after 174 rounds of bidding, with a premium rate of approximately 17.37%; The Chaoyang Jiangtai No. 44 plot, located within the Fifth Ring Road and adjacent to Wangjing, is temporarily suspended from sale.

Two land auctions once gave people the impression that low-density plots in the suburbs were more favored by real estate companies. On September 8th, the 47th plot of Songzhuang in Tongzhou, Beijing, broke this judgment. This plot has a plot ratio of 1.05 and a height limit of 18 meters, which is similar to the indicators of the Wenyuhe plot. It was ultimately sold at a bottom price of 996.2 million yuan.

A series of policies were introduced around August 28th, involving adjustments to the sales of commercial housing and real estate credit systems. For real estate companies participating in bidding, the value of a piece of land depends not only on how much the house can be sold for, but also on the investment in land acquisition and construction, as well as the investment return cycle.

The original investment standards can only explain a part, not the whole, "said Li Yang.

Price increase and stop

The location of the Jiangtai plot in Beijing and the Zhenru plot in Shanghai are both good, with the common feature being a high total price. The starting auction price for the Jiangtai plot in Beijing is 7.521 billion yuan; The Shanghai Zhenru plot was acquired by Zhonghai for a minimum price of approximately 15.02 billion yuan.

The Songjiang plot in Shanghai and the Wenyuhe plot in Beijing are both located in the suburbs with low plot ratios, but the starting prices differ greatly. The starting price for the Songjiang plot is 500 million yuan, and the starting price for the Wenyuhe plot is 7.071 billion yuan. Both plots of land underwent multiple rounds of bidding and were sold at a certain premium.

Among them, the Wenyuhe plot in Beijing is close to the central villa area, surrounded by multiple international schools. In 2025, China Resources Land's Runyu Garden project, which is located in the same area, has achieved an online signing rate of over 86%, with an average online signing price of 72000 yuan/square meter. The Wenyuhe plot acquired by China Resources Land has a floor price of approximately 40000 yuan per square meter.

Li Yang believes that although the market expectation for the Wenyuhe plot is good, the total price is high, and the investment recovery cycle has been extended after the new policy. Not all real estate companies have the ability to participate in bidding and continue to bid. The 174 rounds of bidding for the Wenyuhe plot mainly occurred between two bidding entities.

The land market in Guangzhou presents another situation. On September 4th, the Daguan Road plot in Tianhe District, located in the core area, started filming, attracting four companies including Yuexiu, Poly, Zhushi, and Tianhe High tech to apply. In the end, Yuexiu Property won the bid with 2.481 billion yuan, with a premium rate of 15.88%.

Cities such as Hangzhou, Chengdu, and Xi'an mainly focus on low total price transactions. On August 29th, 7 residential plots were sold in Xi'an, with only 2 plots having a total transaction price exceeding 1 billion yuan; On September 1st, a residential land with a plot ratio of 1.5 in Donghu New City, Linping, Hangzhou was sold for approximately 286 million yuan; On September 3rd, two pieces of residential land were sold in Chengdu, with a total price of 320 million yuan and 69 million yuan respectively.

The new policy has been in place for more than ten days, and the land market is experiencing uneven heating and cooling. Li Yang said that the sample available for reference in the land market is limited, and the current transaction results are not enough to support real estate companies to form new land acquisition strategies. However, existing cases have shown that the supply-demand differentiation between different cities and land parcels is still continuing.

Some high-quality land parcels with high total prices and good market expectations have further increased their requirements for financial strength. After the new policy, real estate companies pay more attention to cash flow security, and the number of companies that can participate in such land competition has decreased. The ability and willingness of the same real estate company to continuously participate in high price land parcels are also limited, and the demand for high price land parcels in the land market may decrease as a result.

The total price of the Shanghai Putuo Zhenru plot is 15.019 billion yuan, with a total construction area of nearly 400000 square meters, of which residential buildings account for nearly half. With such a large investment, there are bound to be few real estate companies willing to bet. It is difficult to recover all the investment at once solely through residential sales, and some of the profits need to be realized through subsequent commercial operations.

The funding threshold for low price and low plot ratio plots is relatively low, making it easier to attract real estate companies to participate. Other capital required for asset allocation will also intervene. Li Yang believes that in order to reduce the total price of a single plot of land, some cities may split and sell large plots of land in the future.

But small-scale projects do not necessarily mean they are easy to sell. The competition in the market for first-time and mid-range improvement is fierce, and low-density residential customers value not only the product itself, but also the region, customer base, and supporting conditions.

The regional head of a real estate company told the Economic Observer that the overall activity of the land market is not as high as before, and the number of participating bidders has decreased. Even if they participate in bidding, the bidding is more cautious. After the new policy, they will still participate in the bidding of some high-quality land parcels, but they are mostly in a wait-and-see state and rarely hold the mentality of being determined to win.

Change And Constancy

The regional head of the real estate company mentioned above said that after the new policy was introduced, the land transfer rules themselves have not changed much, and even the contract template has not been updated. What really changes is the way project funds are operated, real estate companies need to invest more of their own funds, and the sales payment cycle has also been extended.

According to the Notice on Improving the Sales System of Commercial Housing, whether the project is subject to new regulations or old regulations depends on whether a construction permit has been obtained at the time of document implementation. Projects that have already obtained construction permits are subject to the old regulations for pre-sale and fund supervision; The new regulations apply to projects that have not yet obtained a construction permit.

As of now, most cities have not yet issued corresponding implementation rules, but new regulations on financial supervision have come into effect. Projects that are subject to the new regulations need to apply for pre-sale after the main structure is capped, and the node for obtaining sales receipts will also be moved accordingly.

This means that real estate companies not only need to calculate the land payment when acquiring land, but also need to prepare more funds for subsequent construction; It is necessary to determine whether the project can be sold and calculate when the funds can truly be withdrawn. The weight of cash flow and fund scheduling ability in investment decision-making has increased.

The regional head of the real estate company mentioned above said that obtaining a pre-sale permit, signing a purchase contract, and receiving mortgage funds are not at the same stage of the project, and the amount of repayment that can be generated in the early stage is limited. During the period from the topping out of the main structure to the completion filing, other funds are still needed to continue the expenses such as project funds, material costs, and decoration.

After the main structure is capped, the project still has significant financial expenditures. In addition to subsequent engineering construction, it also includes major supporting fees and related taxes and fees. If the sales revenue is insufficient, the real estate company needs to supplement funds through other channels.

Financial constraints directly affect land acquisition choices. Li Yang believes that in the future, only a few real estate companies will be able to continue undertaking high priced and large-scale projects, and more companies will actively choose low priced and small-scale projects.

The investment manager of a real estate company told Economic Observer that the company's investment portfolio usually needs to balance strategic projects and revolving projects. The market certainty of large-scale projects in the core area is relatively high, and the investment is also greater; Turnover projects emphasize capital efficiency, with land prices typically around 1 billion yuan and project volumes not exceeding 500 units, preferably between two to three hundred units, with a turnover cycle controlled within two years.

The product form can also affect the capital cycle. The construction period of high-rise residential buildings is relatively long, and the payment collection node is correspondingly delayed; The construction period of low rise residential buildings is relatively short. This is also one of the reasons why some low plot ratio plots have attracted the attention of real estate companies.

For real estate companies, the land acquisition quotation needs to be included in the entire funding plate for calculation. If the selling price remains unchanged but the payment is delayed, there may be an increase in capital occupation and interest expenses; Extending the loan term and advancing the project in installments can alleviate some of the pressure, but the project turnover cycle will also be extended.

The capital, financing conditions, and development experience that different real estate companies can invest in the same plot of land are not the same. The acceptable payback period for a company may have exceeded the tolerance of another company; Even if the expected selling price is the same, the construction cost and sales progress may differ, resulting in different pricing limits in the land market.

Stock Ledger

In addition to new investments, real estate companies also need to rearrange the land they have already acquired. For enterprises that have recently acquired high priced land parcels, subsequent land payments, project construction funds, and new investment needs may be concentrated in the same stage.

A medium-sized real estate developer told the Economic Observer that before the new policy on August 28th, their company obtained a strategic investment project with a high land price. After the new policy was introduced, the company plans to introduce strategic investors for the project due to cash flow management needs. If developed independently, it will not only limit future investments, but also put the entire group in danger.

Before the new policy, high priced land parcels were not uncommon. In August alone, the transaction price of Beijing Nanmo Fang plot was 8.399 billion yuan, and the transaction price of Sijiqing plot was 9.761 billion yuan; The transaction price of the Shiliugang plot in Pazhou, Guangzhou was 8.056 billion yuan; The transaction price of the Hongkou North Bund plot in Shanghai was 3.845 billion yuan.

After the new policy, the methods for calculating project payments and profits have changed, and companies need to re evaluate the cash flow occupancy of these projects. Introducing cooperative funds can reduce the financial pressure on a single real estate enterprise, but when the partner enters, how much investment to share, and who bears the additional investment obligation during the construction period will all affect the occupation of funds, and project profits will also be redistributed with equity.

Li Yang believes that projects that have already acquired land but have not yet started construction before the new policy are in an awkward situation. This type of project calculates returns based on the original investment model when acquiring land, and may still maintain a slight profit in the current market environment; After changes in payment and financing conditions, the original calculation needs to be recalculated.

For development companies, whether to continue development or choose to withdraw from the site, both require costs. Especially for high total price and large-scale projects, after the payment cycle is extended, the profits of the previous period may be swallowed up by the costs of the subsequent period.

The new policy does not prohibit pre-sales, nor does it mandate the sale of existing properties for all projects, but the pre-sale conditions and fund supervision rules have changed. Even if pre-sales continue, investment return, payment cycle, and cash flow are still variables that real estate companies must recalculate.

Before the implementation of the new regulations, due to factors such as market downturn, the proportion of existing housing sales in new housing transactions had already exceeded 30%. Some homebuyers are concerned about the project being abandoned and the price dropping when the pre-sale house is delivered, so they tend to choose existing houses when purchasing. Even if local regulations do not mandate the sale of existing properties, delivery certainty will still be an important consideration for homebuyers when pre-sale and existing properties compete on the same platform.

The above-mentioned medium-sized real estate enterprise personnel said that with the implementation of "good house" projects, these projects have improved in terms of housing acquisition rate, floor height, and supporting facilities compared to old products, which has once created product advantages for some pre-sale houses over existing ones. As the gap between new and old building standards gradually narrows, this advantage may also weaken.

Li Yang told the Economic Observer that for land that has been sold but 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 some public facilities supporting the project or adjusting the transfer price, but there is currently no clear information.

(Author Tian Guobao)