Chinese Local Governments Continue Buying Idle Land to Reduce Inventory

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Local governments across China are ramping up plans to purchase unused land this year through the issuance of special purpose bonds. Industry analysts suggest that provinces and cities nationwide are intensifying efforts to reduce real estate inventories, stimulate their housing markets, and reignite demand for land and property.

Acquiring idle land parcels has become a central strategy in the country’s initiative to lower housing excesses. In October 2024, the Ministry of Finance announced support measures enabling regional authorities to utilize these bonds for such purposes.

By the end of last month, 28 provinces and cities had unveiled plans to sell over CNY770 billion (approximately USD111.6 billion) in bonds, with more than CNY335 billion already raised, based on data from think tank China Index Academy.

In the previous year, 26 provinces and cities revealed intentions to leverage special bonds for purchasing unused land. Zhejiang Province led the efforts with a budget exceeding CNY90 billion (about USD13 billion), followed by Guangdong Province with over CNY89 billion. Among cities, Chongqing ranked first with nearly CNY70 billion allocated for land acquisitions.

Early this year, Chongqing aimed to repurchase 101 land parcels within the main urban area and surrounding districts, totaling around CNY14.5 billion (roughly USD2.1 billion).

Most of the land targeted for acquisition—around 85%—belongs to local state-owned enterprises, including China Poly Group, China Resources Holdings, and Overseas Chinese Town. Private companies own the remaining 13%.

Provinces and cities are expected to continue their efforts to rejuvenate existing land resources, aligned with the objectives outlined in this year’s Government Work Report. Industry experts anticipate that the pace of idle land buybacks will remain robust into 2026.

The balance between new land supply and existing stock has become a crucial issue in the real estate sector. Efforts are underway to breathe new life into current inventories, such as repurposing idle land in traditional sectors and permitting state-owned firms to purchase pre-owned homes, noted Yan Yuejin, deputy director of the E-House China Research and Development Institute.