Economic Observer reporter Tian Guobao

On November 5, 2026, bidding for two residential plots in Tuofangying, Jiangtai Township, Chaoyang District, Beijing began. Among them, the planned construction area of the 55 combination plot is about 97900 square meters, with a starting price of 4.5 billion yuan; The planned construction area of Plot 56 is approximately 73400 square meters, with a starting price of 3.8 billion yuan.

Previously, the two plots of land were part of a single auction project, originally scheduled to complete bidding on September 3rd, but were later suspended from auction. On October 16th, the project was split into two parcels and re listed.

After the split, the total planned construction area of the two plots of land is still about 171300 square meters, and the initial total price has increased by 779 million yuan. The sports venues and designated social parking spaces that were originally built by the winning bidder for free have been changed to be built by the winning bidder and repurchased by the Chaoyang District Sports Bureau.

Similar arrangements have also appeared in other plots. Part of the commercial and social parking facilities for the Fengtai Minsi project in Beijing will be constructed by the winning bidder and purchased by designated enterprises of the district government at cost price; The underground passage, public green space, and switch station relocation project attached to a residential transfer project in Putuo, Shanghai were funded by the district government to the project owner, and the winning bidder was responsible for the entire construction process.

The construction cost of supporting public buildings is an expense that real estate companies must consider when calculating land costs. A regional head of a state-owned real estate company told the Economic Observer that this part of the cost will dilute project profits. When sales are smooth, real estate companies can still accept it; As the turnover cycle lengthens, the impact of this expenditure on investment decisions increases accordingly.

On August 28th, the Ministry of Housing and Urban Rural Development and three other departments issued the "Notice on Improving the Sales System of Commercial Housing" (hereinafter referred to as the "828 New Policy"), raising the pre-sale threshold for new projects and strengthening the supervision of sales funds. Who will contribute, when will payment be made, and when will delivery be made for the supporting facilities of public buildings have also become issues that real estate companies need to reconsider when arranging project funds.

Who will bear the cost

The listing documents for the Tuofangying plot show that the construction and installation cost control standards for the sports facilities in Plot 55 0001 and 0018 are 15000 yuan/square meter and 9000 yuan/square meter, respectively; The total construction and installation cost of no less than 300 social parking spaces and related facilities on the underground second floor of 0018 is approximately 75 million yuan. The cost control standard for the construction and installation of sports facilities in Plot 56, 0002 is approximately 13000 yuan per square meter.

According to the above standards, the construction and installation cost of the 0001 sports venue on plot 55 is approximately 486 million yuan, the 0018 sports venue is approximately 77 million yuan, and including the underground social parking lot, the total cost is approximately 637 million yuan; The construction and installation cost of the sports venue on plot 56 is approximately 248 million yuan. The total construction and installation cost of the above-mentioned public buildings on the two plots of land is about 885 million yuan.

After the public building supporting facilities were changed to paid repurchase, the starting total price of land also increased. The starting price for the first listing of this project was 7.521 billion yuan, and after re listing, the total starting price for the two plots of land was 8.3 billion yuan, an increase of 779 million yuan.

According to the listing documents, the sports facilities and designated parking spaces on both plots of land will be constructed by the winning bidder, repurchased by Chaoyang District Sports Bureau, and the funds will be paid in batches according to the actual progress of the project. Plot 55, 0001, must be completed, accepted, and delivered before December 2028, with 0018 to be delivered simultaneously with the residential area; The delivery of plot 56, 0002, must be completed before May 2028.

The regional head of the state-owned real estate enterprise mentioned above believes that although land prices have increased, the repurchase arrangement has changed the way real estate enterprises bear the supporting costs of public construction. In the past, this part of the cost was absorbed by real estate companies themselves, and they would try their best to reduce expenses; After changing to paid buybacks, real estate companies have corresponding sources of income and also provide space for improving the quality of supporting construction.

In his opinion, the logic of real estate companies calculating project returns has also changed accordingly. When constructing without compensation, the relevant construction and installation costs are the project's cost expenditures; After the paid repurchase, the real estate company increased a payment, which can be used to calculate the income and profit of the construction agency business.

The Beijing Fengtai Minsi Temple plot is scheduled to be auctioned on November 17th, with a planned construction area of approximately 131700 square meters and a starting price of 4.6 billion yuan. In addition to residential areas, the project also includes facilities such as commercial and social parking lots.

The listing documents stipulate that the 0104 commercial plot and 0101 social parking lot will be constructed by the winning bidder, and the Fengtai District government will designate enterprises to purchase them as a whole at cost price. After obtaining the corresponding above ground and underground properties, the purchaser must hold them until the expiration of the land use term. There is another 15 meter wide east-west neighborhood road within the 0101 plot, which will be constructed by the winning bidder and transferred to the Fengtai District Urban Management Committee free of charge.

The above-mentioned plot in Putuo, Shanghai is constructed through government funding and the assignee's agency. The supporting projects include the underground H-shaped passages and ancillary facilities of Nanshi Road and Liquan Road, two public green spaces, and a 10 kV switch station relocation project. The Putuo District Government will provide funding to the relevant project subjects, and the assignee will be responsible for the entire construction process.

The Economic Observer found through a review of land bidding and auction documents in some first - and second tier cities that it is still common for public building facilities to be built by bidders and transferred free of charge. Paid construction and repurchase are currently mainly seen on some plots of land in some cities, and have not been widely adopted in Beijing and Shanghai.

A person from the Beijing Municipal Commission of Planning and Natural Resources told the Economic Observer that the scale, construction, and transfer methods of supporting public buildings are mainly determined by the district government where the land is located based on the land market situation.

Increase or decrease in public construction tasks

The regional head of the state-owned real estate enterprise mentioned above introduced that there are many types of ancillary construction tasks attached to residential projects, and there are also differences in the ways of bearing costs and transferring property.

The main supporting service projects such as roads, greening, civil air defense, and public squares, as well as their surrounding areas, are mostly funded and constructed by real estate companies, and are transferred free of charge according to the agreement. Schools, hospitals, venues, public transportation stations, and other facilities mainly provide public services, with some also having operational functions. In the past, they were mostly funded by real estate companies and transferred for free, and repurchases were not common.

Community commercial offices, public rental housing, talent apartments, relocation houses and other supporting properties are respectively involved in business, leasing and resettlement purposes. In practical project operations, it is common to repurchase such properties for a fee, and there are also cases of gratuitous transfer.

The regional leader said that the situation of urban renewal and old renovation projects is more complex. Collective organizations or enterprises with original ownership often require not only monetary compensation, but also the acquisition of a certain scale of commercial or office space after the completion of the project. Such properties are sometimes included in the project construction task.

After the "828 New Policy", some cities not only adjusted the transfer methods of supporting facilities, but also began to reduce or relax the requirements for the construction of residential land.

On October 21st, the Housing and Urban Renewal Bureau of Shiyan City and other departments jointly issued implementation opinions, clarifying the cancellation of the requirement for the construction of talent apartments for commercial residential land that signed transfer contracts on or after August 28th; If the planned residential area is less than 150000 square meters, it is not necessary to build a kindergarten.

A person in charge of a private real estate company in a fourth tier city told the Economic Observer that their city requires each residential area to be equipped with public rental housing. This not only increases construction costs, but also squeezes saleable area, "overall, the impact on net profit is around 10%".

He believes that if the local authorities can also cancel or relax some of the construction requirements, even if the current house sales and capital occupation cycle are implemented for a long time, as long as the project has sufficient profit space, real estate companies are still willing to acquire land. The current difficulty lies in the fact that a total of 10 points of profit, spread over a four to five year cycle, is basically not profitable. He currently has seven or eight ongoing projects and three plots of land that have not yet been developed. In these fourth tier cities, the development cycle of an existing housing project is usually about five years, and even if three plots are developed in a cross cutting manner, "it can still be done for seven or eight years without rushing to acquire land".

The regional head of the state-owned real estate enterprise mentioned above stated that adjusting the transfer method, content, and proportion of public building supporting facilities aims to reduce the investment burden of real estate enterprises and attract more enterprises to participate in land bidding. Enterprises will include land prices, construction costs, and payment arrangements in their calculations.

Change in Fund Ranking

The 828 New Policy requires that newly sold land for commercial housing projects prioritize the sale of existing houses; For those who choose pre-sale, the main structure of the new project's individual building should be capped. The down payment, personal housing loan, deposit and other funds paid by the homebuyer will be deposited into the regulatory account, and the supervision will be lifted after the project is completed and accepted, and the relevant supporting facilities are ready for delivery.

The local implementation opinions that have been issued have relatively consistent requirements for fund supervision, but there are differences in sales methods. Some land parcels explicitly require the sale of existing houses, while some cities have handed over the option to the acquiring real estate companies.

The increase in pre-sale thresholds and stricter supervision of sales funds require real estate companies to allocate longer periods of funds for land, residential entities, and supporting projects before they can freely dispose of sales proceeds. The larger the volume of public facilities, the more construction investment needs to be covered. The government's payment of construction or repurchase funds according to the progress can provide funds for the corresponding projects and alleviate the pressure of real estate companies to advance funds.

The scale, cost, and payment method of supporting public buildings not only affect the cash flow of individual projects, but also affect the ability of real estate companies to acquire land and reinvest in the future. When local governments sell land, they need to strike a balance between land revenue and market transactions.

Partial adjustments have already been reflected in the land payment terms. According to the implementation opinions of Beijing's 828 New Policy, for land sold after August 28th, the down payment shall not be less than 50%, and the remaining balance can be paid within two years without interest.

After the splitting of the Camel House Camp project, the starting price of the land parcel has been reduced from the original 7.521 billion yuan to 4.5 billion yuan and 3.8 billion yuan, lowering the funding threshold for enterprises to participate in individual projects. The two plots of land have also set up a deposit sharing mechanism, and real estate companies participating in the bidding for the two plots of land can pay a reduced deposit of 760 million yuan.

The construction plan for municipal facilities around the Tuofangying plot has also been advanced. The planned construction of the road connecting the banks of the Ba River is 9 months ahead of schedule; The relevant sections of Jiuxianqiao South Street will be advanced by 19 months to connect the completion of residential buildings and the delivery of supporting facilities.

Entering the construction phase, the payment time of repurchase funds directly affects the scale of advance funding for real estate companies. In the past, even if the government agreed to repurchase talent housing, relocation housing, public rental housing and other supporting properties, the early construction still required a large amount of investment from real estate companies, and some projects had not received repurchase payments after two or three years of delivery.

A representative from a medium-sized private real estate company told the Economic Observer that their company has not developed any new projects for many years, but as of now, various types of repurchase payments that have not yet been paid by local governments still amount to billions of yuan. According to his understanding, some large real estate companies have more development projects, and the scale of such receivables is also larger.

The person said that the government's repurchase funds involve financial budget arrangements and approval by the National People's Congress. Even if included in the budget, the actual receipts of enterprises are still affected by the local financial situation.

Some plots in Shanghai are invested by the government and constructed by real estate companies, while some plots in Beijing have agreed to pay repurchase payments according to the progress of the project, and the payment arrangements have been moved forward to the construction stage. Compared to waiting for repurchase payments after completion and handover, these arrangements help reduce the amount of advance funding and capital occupation by real estate companies.

A senior real estate developer told the Economic Observer that the implementation time of the 828 new policy is still short, and the new policy projects have not yet started, and there is a lack of actual cases of the impact on financial pressure. He said that in the past, companies usually arranged project funds on an annual basis, but now when making a funding plan, it usually needs to cover three to five years.

(Author Tian Guobao)