Beijing Land Sales Drop 66% in First Half

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Beijing has concluded its land auction activities for the first half of the year, with the market still facing significant challenges after sales plummeted by 66% compared to the previous year.

During the first six months, land sales at auction sites across the city totaled over CNY34 billion (approximately USD4.7 billion), as recorded in late June following the final auction in Tongzhou district. The average price per square meter declined by 35%, settling at CNY27,885 (roughly USD4,100), while the total planned construction area nearly halved to 1.22 million square meters.

Additionally, the average premium percentage decreased to 3.6% from 7.2%, with only seven out of 21 parcels selling above reserve prices, compared to nine last year. The number of plots sold with premiums exceeding 10% also dropped from seven to four.

Developers are now taking a more cautious stance on land investments due to sluggish demand, according to Zhang Kai, head of land market research. They are focusing their capital on key parcels expected to generate reliable sales and profitable returns. This cautious approach has led to a divided market where most lands are sold at reserve prices, while a select few attract intense bidding wars, Zhang explained.

This cautious trend is expected to continue into the second half of the year in Beijing’s land market. Fan Yijie, a senior analyst at the same agency, indicated that premium parcels located in central urban areas will continue to see aggressive competition and often close above the asking price. Conversely, auctions for land in suburban and outer districts are likely to face substantial hurdles, with most sales occurring at reserve prices.

At the Tongzhou auction, one parcel was sold for just over CNY1 billion (about USD140.6 million) after five rounds of online bidding and 173 rounds of on-site offers, with the premium reaching 21%. This marked the highest premium of any auction in Beijing during the first half of the year.

The Tongzhou land auction drew intense competition among developers amid the broader market pressures. The main catalyst was the district’s relaxation of its nearly nine-year-old home purchase restrictions, which developers believe will stimulate significant demand, Zhang noted.