China Begins Selling Land with High Premiums

In February 2025, several positive trends were recorded in China’s real estate market, impacting both housing and land transactions, Economic Information Daily reports. In several cities, auctions were held where land plots were sold at significant markups. Experts consider these to be clear signals that the market's decline is ending and stabilization is underway.

A plot in Zhengzhou's Jinshui district was sold with a record 87.5% premium after 255 rounds of bidding and six hours of trading. Such high bids have not been seen since 2021. The minimum price of 13,713 yuan ($1,920) per square meter also became the highest in the seven districts of the municipality. In total, 35 major cities saw deals covering 234,600 square meters during the Lunar New Year celebrations. According to Bloomberg, citing data from China Real Estate Information Corp, first-tier cities experienced a 134% growth compared to the previous year. This land market recovery stems from a gradual improvement in market demand.

A separate Shanghai Securities News report also highlighted increased land sales in major cities such as Beijing, Shanghai, and Shenzhen. According to China Index Academy, in January, transaction values across 300 cities increased by 8% year-on-year, while the average price per square meter surged by 33%. Experts noted that land auction prices in Beijing, Zhengzhou, Shenzhen, and Hangzhou rose due to supportive policies and improved market confidence. This contrasts with previous auctions, which closed at low prices due to developers' lack of interest.

Since early 2025, the land market has moved away from reserve price transactions, with more plots undergoing multiple rounds of bidding and even being sold at high premiums. Experts describe the fierce competition for high-quality land as not a coincidence but a sign of optimism among companies regarding the real estate market’s future. It is also seen as clear evidence of gradually recovering market confidence.

Yan Yuejin, Vice President of Shanghai Institute of Real Estate Research Yiju, stated that the 2025 land auction boom with high premiums is the result of multiple factors, including a shortage of high-quality resources, strong policy support, and improved market expectations. He noted that since Q4 2024, housing markets in first-tier cities and key second-tier cities have stabilized in terms of transaction volumes and prices. Market sentiment has significantly improved, and real estate companies' confidence in the future has strengthened. In 2025, the main focus of the real estate industry remains ending the downturn and achieving market stabilization. Authorities plan to optimize land supply to further stimulate buyer interest.

Developers Still Struggling with Debt

Despite the rebounding land market, Chinese developers continue to face a debt crisis. In January 2025, shares of bankrupt developer Sunac China Holdings Ltd. plunged 30%, marking the steepest decline since October 8. China Vanke Co., one of the country’s largest developers, faces billions in debt repayments this year. Whether it can secure new financing to avoid default remains uncertain. However, in February, reports emerged that authorities are working on a plan to help China Vanke Co. cover a 50 billion yuan ($6.8 billion) funding gap.

In 2024, the total transactions of the top 100 developers fell by 28.1%, with many still undergoing restructuring. Chinese authorities have introduced a new reform plan aimed at abolishing local protectionism, protecting property rights, and promoting fair competition. The revised regulations will standardize market access and eliminate barriers preventing investors from entering the market.

Additionally, the government plans to review administrative penalty systems that allow officials to impose fines at their discretion. Residency restrictions that prevent workers from joining social security systems in cities where they are employed will be completely removed.