China's Leading Builders Increase Land Spending by Nearly 30% in First Eight Months

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Land purchases by China’s top 100 property developers increased nearly 30% in the first eight months of this year compared to the same period last year, even though the domestic real estate market remains sluggish.

During this period, developers spent over 605.6 billion yuan (approximately $83.4 billion) on land acquisitions, marking a 28% rise from the previous year, according to data from the China Index Academy. The majority of these transactions—eight out of ten—were made by government-owned builders at various levels.

Some leading developers shared their land acquisition plans during their first-half earnings reports, emphasizing a focus on investment in first- and second-tier cities, where the property markets continue to show relative stability. Even those that previously expanded into third- and fourth-tier cities are now shifting their attention back to prime urban centers.

Investing in high-quality projects near coveted locations has resulted in strong sales performance, gradually improving developers’ profits and aiding in the recovery of their financial health.

Greentown China Holdings, among the most active purchasers, reported robust sales at recent projects in Suzhou, Shanghai, and Nanjing, with most units sold out. Similarly, China Jinmao stated that its projects acquired since last year have outperformed investment expectations and are expected to boost its gross profit margin.

Developers remain eager to increase their land holdings, with a particular interest in premium parcels.

China Overseas Land & Investment anticipates growth in investment during the latter half of the year. Despite overall market contraction, demand for property upgrades continues to rise, creating ample development opportunities as the market becomes more concentrated.

Market analysts forecast that regional disparities in urban markets will become more pronounced in the second half of 2023. Core areas in first-tier and resilient second-tier cities are expected to stabilize sooner, while third- and fourth-tier cities, as well as weaker second-tier markets, will need more time to reduce excess inventory and rebuild demand.