CRIC Real Estate Research: The Three Major Logics of the Inevitability of High Heat in Land Auctions in 2025

2025The city has seen high total prices and high premium plots, indicating a clear trend of the spread of land auction heat.Ningbo, Jinan, Shenyang, Wuhan and other cities have also experienced localized high fever. For example, Hunnan District has seen a long-awaited high premium land auction, with a low-density residential land being transacted at a premium rate of 17.5%. The plot has a plot ratio of 1.2, and after 60 rounds of bidding, it was acquired by China Overseas Land & Investment Ltd. for 690 million yuan, with a transaction floor price of 7,050 yuan per square meter. Currently, nearby high-quality residential properties are selling at an average price of around 16,000 yuan per square meter. This highlights the confidence of companies in improving demand and their strong preference for low-density products. This trend reflects the gradient conduction of stabilizing market effects. While "model students" offer excellent investment opportunities, under the control of supply scale, investment opportunities in cities such as Beijing, Shanghai, Hangzhou, and Chengdu still fail to meet the investment needs of companies, leading real estate developers to expand into potential areas in secondary core cities. Furthermore, the supply strategy under inventory control further enhances the attractiveness of high-quality land parcels (such as reducing plot ratios, strengthening supporting facilities). For example, the plot density in Ningbo Yinzhou, Shenyang Hunnan, and Suzhou Huxi is all less than 1.6, either with outstanding qualities themselves or enjoying river/ocean views, complete living facilities, and clear development prospects like the Qing Shan Binjiang in Wuhan and the East China Sea site in Quanzhou. Outlook for the sustainability of the current land market recovery The warming up of the land market in 2025 is expected to be a long-term trend with the joint efforts of policies, market, and enterprises: 1. Deepening supply-side reform: activating existing stock and optimizing incremental supply The mechanism of replacing existing stock with incremental supply at the central level will continue to optimize the supply structure. In February 2025, Guangdong issued a special bond of 30.4 billion yuan to recover idle stock land, becoming the first province in the country to issue special bonds to acquire idle land. In addition, cities such as Yueyang in Hunan, Kaifeng in Henan, Jinhua in Zhejiang, Ji'an in Jiangxi, Guigang in Guangxi, and Siping in Jilin have successively issued announcements to publicly solicit idle land for collection. On the other hand, further optimizing land supply, the total construction area of pre-supplied land in 2025 decreased by 47% year-on-year, but the quality of land supply in core cities has significantly improved. For example, in Shanghai, the Minhang district has recently released two "production and city residential" lands with a plot ratio of only 1.01, with a starting price of 35,000 yuan per square meter. This will fill the gap in high-end low-density improvement demands within the region as high-quality villas generally sell for over 100,000 yuan per square meter. Beijing has proposed "flexible land supply" for the first time, adjusting the supply scale of residential land from 300 hectares to 240-300 hectares, further enhancing its scarcity. 2. Local governments actively implement market-stabilizing policies to drive sustained recovery of the land market The Two Sessions in 2025 defined the stabilizing housing market and building good houses to promote transformation. Market-stabilizing policies in core cities have been further strengthened, with Beijing, Shanghai, Guangzhou, and Shenzhen all issuing more than five market-stabilizing policies since 2025. These policies mainly involve optimizing the housing provident fund policy, tax subsidies, and promoting the construction of high-quality housing. For example, in response to the opportunity for the new housing price index in Nanjing to rise for three consecutive months and the digestion cycle to fall to within 18 months, Nanjing introduced the "Seven Housing Regulations" on March 31, focusing on the entire chain of housing consumption, constructing a multi-dimensional support system through a policy combination. Two days later, the land auction market in Nanjing received positive feedback. A small residential land on Zhujiang Road sold at a premium rate of 43.4%, with a transaction amount of 443 million yuan, won by Hangzhou Changzhu Group. This plot is a scarce residential land in the main city of Nanjing, with abundant natural landscapes and educational resources. The transaction price is 38,000 yuan per square meter, while the surrounding high-end second-hand housing prices are around 65,000 yuan per square meter. 3. Corporate investment willingness rebounds, leading to a new pattern of industry development dominated by state-owned enterprises In the first quarter of 2025, the value of new home inventory of the top 100 real estate companies increased by 17.8% year-on-year, with the amount rising by 42.2% and the floor area by 5.1%. The total investment volume of the top 100 companies showed a positive year-on-year trend, indicating the bottoming out and rebound of corporate investment enthusiasm. From the perspective of real estate companies, top real estate companies continue to strengthen their strategic acquisitions of high-quality land resources in high-energy cities, with an increase in the number of participating companies and fierce bidding competition for key land parcels. Market concentration further differentiates, with top real estate companies and state-owned enterprises accelerating the optimization of land resources based on their financial advantages, while small and medium-sized real estate companies, constrained by liquidity pressure, continue to shrink their investment radius. This investment pattern is expected to drive high-quality land resources to continue to gather towards top companies, potentially entering a new cycle of industry concentration increase.