In the height of summer, developers show high interest in popular land parcels, land auctions frequently see high-premium transactions, and some cities have even seen the birth of "land kings."

　　According to incomplete statistics, in the just-passed July, hot parcels appeared in Beijing, Shanghai, Hangzhou, Nanjing and other places; some became new "land kings" in their areas, some parcels were contested through dozens of bidding rounds, and some achieved transaction premiums as high as 40%.

　　Major cities also repeatedly "collected gold." Data from the China Index Academy shows that among the top 10 cities nationwide by land transfer fees for all types of land in July, the top ten were: Beijing, Chengdu, Shanghai, Xi'an, Hangzhou, Hefei, Suzhou, Nanjing, Wenzhou, and Fuzhou. Overall, however, the heat in the land market remains a "spotty" phenomenon, and the market as a whole still shows a trend of "shrinking volume."

　　At the micro level, land auctions are still seeking a recovery; at the macro level, a new round of land system reform may be launched.

　　Industry insiders believe that the "Decision" of the Third Plenary Session of the 20th Central Committee further clarified the direction of land system reform. This new urbanization is highly linked to deepening land system reform, and the rational allocation, efficient use, and revitalization of land resources are important directions. Land prices will also be determined more by market supply and demand, and restrictive policies on the land side are expected to be further optimized and adjusted, such as the cancellation of land price caps in core cities.

　　Hot city parcels are being contested

　　In the just-ended July, which city was the "winner" of the land auction market?

　　According to the "China Land Market Monthly Report (July 2024)" released by the China Index Academy, among the top 10 cities nationwide by land transfer fees for all types of land in July, the top ten were: Beijing, Chengdu, Shanghai, Xi'an, Hangzhou, Hefei, Suzhou, Nanjing, Wenzhou, and Fuzhou.

　　Specifically for residential land, among the top 20 cities by transfer fees: Beijing ranked first with 16.6 billion yuan, Chengdu second with 15 billion yuan, and Xi'an third with 9.3 billion yuan; fourth to tenth were Shanghai, Hangzhou, Hefei, Suzhou, Nanjing, Wenzhou, and Fuzhou.

　　Looking at the overall situation in the first seven months, Beijing remains the "main battleground" for land auctions this year, ranking first with 89.8 billion yuan in residential land transfer fees in the first seven months; Hangzhou ranked second with 64.8 billion yuan, and Shanghai third with 51.5 billion yuan; followed by Xi'an, Chengdu, Hefei, Xiamen, Nanjing, and others.

　　First-tier cities and hot second-tier cities are the "main battlefields" currently contested by real estate enterprises. Not only do the rankings show this feature, but most of the high-premium and even "land king" parcels that have appeared this year are also located in hot first- and second-tier cities, and the concentration of real estate enterprise investment is becoming increasingly concentrated.

　　For example, in Beijing, a first-tier city, high-priced transactions have frequently appeared this year, and the land auction market has been bustling. On July 25, Poly Developments, together with Beijing Construction Engineering Group, won a residential-related parcel in Haidian District, Beijing, with a total price of 8.901 billion yuan, setting a new record for the area and becoming the new "land king" of Haidian District.

　　This parcel has quite a story. As early as 2016, the consortium of Vanke and Zhuzong won parcel No. 19 in Xibeiwang Town, Haidian District, for 5.9 billion yuan. However, because the project required 100% self-holding and the residential portion had to be entirely used as rental housing, Zhuzong first withdrew from parcel No. 19, and then Vanke also returned the land, which was relisted for transfer.

　　Now, Poly Developments, together with Beijing Construction Engineering Group, has re-won the parcel after many years, but the price has increased substantially compared with the past. The starting transfer price and upper limit price were 8.6 billion yuan and 10.3 billion yuan, respectively, while in 2016 they were 4.4 billion yuan and 5.9 billion yuan. According to statistics from the China Index Academy, this parcel was the highest-total-price residential land transaction nationwide in July, and the sales guidance price also reached 90,000 yuan per square meter.

　　In Shanghai, a first-tier city, there have also been "small surprises" in land auctions. For example, after the introduction of the "Shanghai Nine Measures," the local government held the third batch of land auctions for 2024 on July 9, canceling the requirement capping the land premium rate at 10% and also not stipulating the relevant housing-land linkage price in the transfer conditions. Among them, the premium rates for the Pingliang Community parcel in Yangpu District and the Changbai Community parcel in Yangpu District ultimately reached 21.2% and 17.1%, respectively.

　　Hot projects in other cities have also continued to emerge. On July 31, a parcel in Fenghuang Subdistrict, Gulou District, Nanjing, was transferred. This was the first residential land launched in the Longjiang section of Gulou District in recent years. After 41 bidding rounds, it was won by Nanjing Jinji Tongchan Real Estate Co., Ltd. for a total price of 468 million yuan, with a transaction floor price of 32,572 yuan per square meter and a premium rate of 20.62%.

　　In Hangzhou, on July 30, a residential parcel in Baima Lake, Binjiang District, was publicly transferred, with a listed starting price of 1.946 billion yuan and a starting floor price of 20,938 yuan per square meter, adopting the principle of "highest bidder wins" to determine the winner. Because no residential land had been supplied in this section for 10 years, after 42 bidding rounds, Greentown won it for 2.716 billion yuan, with a transaction floor price of 29,223 yuan per square meter and a premium rate approaching 40%.

　　Overall, however, it is hard to say that the current land auction market has already recovered, and the investment pace of real estate enterprises is also relatively concentrated and cautious.

　　According to data from the China Index Academy, from January to July 2024, the total land acquisition amount of TOP100 enterprises was 430.71 billion yuan, a year-on-year decrease of 38.0%, with the decline continuing to expand by 2.2 percentage points compared with January-June. "The trend of land acquisition focusing on high-quality parcels in core cities continues, and the intensifying differentiation between the land auction market and the sales market has prompted real estate enterprises to generally remain cautious in land acquisition in the short term."

Will the share of central and state-owned enterprises continue to rise?

　　In the land auction market during the real estate consolidation period, central and state-owned enterprises are the absolute "main force" of the market.

　　In the first seven months of this year, the three real estate enterprises with the highest newly added value of goods were Jianfa Real Estate, China Resources Land, and Poly Developments. Among them, Jianfa Real Estate topped the list with 62.1 billion yuan in newly added value of goods, China Resources Land ranked second with 57.1 billion yuan, and Poly Developments ranked third with 50.8 billion yuan in newly added value of goods; the top ten real estate enterprises had a total newly added value of goods of 431.5 billion yuan, accounting for 32.4% of the top 100 real estate enterprises.

　　Land is the "granary" for sales. At present, not only in the land auction market, but also in sales, the market share of central and state-owned enterprises is continuously increasing.

　　Liu Shui, director of enterprise research at the China Index Academy, said that from the "2024 January-July China Real Estate Enterprise Sales Performance Ranking" and the "2024 January-July National Real Estate Enterprise Land Acquisition TOP100 Ranking" of the China Index Academy, it can be seen that some central and state-owned enterprises show relatively strong sales resilience.

　　He said, for example, Greentown China ranked 7th in sales in July last year and 3rd in July this year. Yuexiu Property ranked 13th in sales in July last year and 9th in July this year, rising 4 places. Poly Property ranked 25th in sales in July last year and 17th in July this year, rising 8 places. China Construction Yipin ranked 39th in sales in July last year and 18th in July this year, a substantial rise of 21 places.

　　"In the short term, in recent years the market share of central and state-owned real estate enterprises in sales and land acquisition will certainly remain on a rising trend. Such enterprises have financing advantages and strong brand advantages, and are more resilient to risks during periods of deep market adjustment," Liu Shui believes. But in the long run, as the real estate market gradually returns to normal, the market share of private real estate enterprises may rise again.

　　"There are only about a dozen central and state-owned real estate enterprises with strong development and operation capabilities, and their overall scale is limited," Liu Shui said. In particular, residents' demand for "good housing" is currently increasing. Under a market scale of 10 trillion yuan, local state-owned enterprises do not have the capacity to support the market. Some private real estate enterprises have higher operating efficiency and strong product power. Once the market returns to normal, these enterprises will be highly competitive and may increase their market share.

　　In addition, at the macro level, the land market will also develop in a more market-oriented and high-quality direction.

　　The recent Third Plenary Session of the 20th Central Committee proposed principles such as "optimizing land management and improving a land management system that efficiently connects with macro policies and regional development," "establishing a coordination mechanism for allocating indicators for new urban construction land with increases in the permanent resident population," and "optimizing the use of urban industrial and commercial land, accelerating the development of the secondary market for construction land, promoting mixed land development and utilization and reasonable conversion of uses, and revitalizing existing land and inefficiently used land."

　　The China Index Academy stated that, overall, this new urbanization is highly linked to deepening land system reform, and the rational allocation, efficient use, and revitalization of land resources are important directions. In addition, land prices will also be determined more by market supply and demand, and restrictive policies on the land side are expected to be further optimized and adjusted, such as the cancellation of land price caps in core cities.

　　"In advantageous areas where the population continues to grow in the future, indicators for new urban construction land may receive more guarantees, and the establishment of the linkage mechanism among 'people, housing, and land' will play a greater role," the institute said. In addition, supporting policies for properly disposing of idle existing land are also expected to be accelerated and implemented. Revitalizing existing land and improving the efficiency of land resource utilization is an inevitable requirement for the high-quality development of the real estate industry.