According to a research report released by 中信证券 (06030), the shift toward completed-home sales is driving corresponding changes in land planning conditions.
Plots located in more central areas and featuring lower floor-area ratios are expected to become the main force in land transactions, providing a foundation for developers to build high-quality new homes and capture product-strength premiums from the source; policy optimizations such as fewer comprehensive plots, smaller and more refined land parcels, and installment-based land payment schedules will help improve corporate capital utilization efficiency and ease the cash inflow pressure caused by delayed sales collections; separately transferred commercial land with clearer property rights provides a basis for the investment-financing-management-exit cycle, and also opens up room for high-quality commercial operations. The firm is bullish on the industry achieving simultaneous improvements in quality and price through building "good houses," continues to favor same-store sales growth of quality heavy-asset retail malls outperforming overall retail sales, and is also optimistic about growth in the light-asset commercial management business.
Key Views from China Securities
The new completed-home sales policy has a significant impact on both supply and demand sides of the land market. For developers, the delayed sales collection cycle forces companies to reassess project IRRs, making them more cautious about investment and land acquisition. They will demand superior land conditions to support quality product development and higher gross margin expectations to offset declining turnover rates. For local governments, against the backdrop of an overall contraction in the land market, they will choose to optimize the pace of land transfer fee payments to help developers balance cash flow pressure, and optimize project planning conditions to attract more capable developers, further intensifying regional differentiation in land.
Land Plot Floor-Area Ratios Continue Downward Trend, More Low-Density Land Expected After New Policy
According to Wind data, the average floor-area ratio of residential land across 100 cities maintained a level above 2.2 before 2021, and has continued to decline to 1.89 by 2026 (as of September 27). The decline in floor-area ratios represents the trend toward lower-density, improvement-oriented residential supply, and also means shrinking per-project inventory value and shorter construction cycles, which helps improve corporate capital utilization efficiency under completed-home sales. Land supply is also expected to increase for low floor-area ratio projects to enhance attractiveness to developers. According to CREIS data on newly launched land in 70 sample cities during the first 23 days of September, the proportion of projects with floor-area ratios below 2.0 increased from 53% in August to 62%, with the average dropping to 1.9; in Guangzhou, the AT1003083 and AT1003084 plots east of Daguang Road in Tianhe District, which were re-listed and transacted in September, had their floor-area ratio lowered from 2.3 during the 2025 land supply period (unsold) to 1.95.
Large-Scale Comprehensive Land Transfers Decline
The traditional approach of local governments expanding urban boundaries through large-scale comprehensive land parcel transfers no longer suits current urban development needs; after comprehensively considering development cycles, capital pressure, and future market risks, developers also prefer "small but beautiful" land in core areas with independent business formats and controllable sizes. As of September 27, 2026, the average single-plot building area of residential land transactions across 100 cities fell 43% from the 2020 peak to 58,000 square meters; in CREIS's 70 sample cities, the average and maximum values of land area and building area for newly launched land in September after the new policy all declined compared to land launched in August before the policy.
More Commercial Land Expected to Be Transferred Separately
Historically, much commercial land was transferred as part of comprehensive land parcels alongside residential and commercial-residential land. Some developers lacked long-term planning for commercial land and did not possess quality management capabilities, resulting in low operational quality of retained commercial properties after completing residential sales, tying up corporate capital without generating returns. With the development of the multi-tier REITs market, the self-circulation of investment, financing, construction, management, and exit for commercial land has become possible. Separately transferred commercial land has clearer property rights, and the exit path becomes smooth once operations mature; the renewal of industrial and commercial land use rights also highlights the value of commercial management, enhancing sustainability. The firm believes that completed-home sales will accelerate the process of separate commercial plot transfers, commercial land planning conditions will continue to optimize, and commercial operation management will simultaneously usher in broad incremental space.
Developers More Cautious in Land Acquisition, Transaction Differentiation Intensifies
The average premium rate for residential land transferred in 70 sample cities in September was 3.8%, a sharp decline from the 8.0% average premium rate in August, with 79% of land transacted at the reserve price after the new policy. Taking two plots both located in Jing'an District, Shanghai, with similar floor-area ratios and both involving Jianfa Real Estate as a participant, as an example: the N070302 unit 117a-09 plot transacted after the new policy had a premium rate of only 5%, while the N070402 unit 081a-08 plot transacted on June 30 before the new policy reached a premium rate of 30%. Of course, developers are willing to pay higher premiums when certain conditions are met: first, they already have project layouts in the same area with good returns; second, newly transferred plots have significantly better planning conditions such as floor-area ratios; third, after a long period without residential land auctions in core areas, newly transferred scarce plots allow developers to build benchmark projects, such as in Shanghai's Huangpu District and the Antuoshan area of Shenzhen's Futian District.
Quality Improvement Drives Housing Price Increases, but Land Prices May Not Rise in Tandem
Under the old model, developers prioritized development scale, and pro-cyclical investment expansion led to intensified land acquisition competition; during presale, homebuyers focused on land location and planning expectations rather than housing quality itself, and these factors together caused land price elasticity to exceed housing price elasticity. The firm believes that as the new completed-home sales model advances, conditions such as housing design, construction techniques, and maintenance management will become more intuitively visible, and housing price increases will be driven more by product strength improvements. Combined with developers being more cautious about controlling land acquisition costs, the firm believes land prices may not experience broad-based increases as in historical housing price upcycles; even if there are price increases, they will be more based on optimization of planning conditions.
Risk Factors
Detailed rules for completed-home sales policies have not yet been introduced in some regions, and specific land transfer policies face uncertainty; if newly transferred land has better planning, the value of developers' existing undeveloped land may continue to be suppressed; developers' land acquisition strategies may converge, and homogenized competition could affect plot profit margins.