Summary of Key Points
The land auction market in the first half of 2026 presented a stark contrast: on one hand, there was a 20% decrease in both the supply and transaction volume of residential land nationwide, as well as a 30% decline in land transfer fees, with land markets in third- and fourth-tier cities almost coming to a standstill; on the other hand, core cities such as Shenzhen, Hangzhou, and Suzhou witnessed fierce competition for key plots, resulting in 14 "land kings" (plots with the highest transaction prices per unit area), with premium rates soaring (with a single-month premium rate of 63% in first-tier cities). This is not a general rise in the housing market but rather an extreme polarization due to deep industry adjustments. Real estate companies, seeking survival, are focusing their investments on core plots in these cities (perceived as "surefire assets"), coupled with the government's effort to improve the quality of land supplied while reducing its quantity, which has jointly fueled this trend of high transaction prices. The main buyers of land are state-owned and central enterprises, while private companies remain cautious.
Detailed Analysis
How Hot is the "Land King" Trend in Core Cities?
The first half of this year saw at least 14 plots in 36 first- and second-tier cities become "land kings." Several notable cases illustrate the intensity of the trend:
- Shenzhen: A residential plot in Yuehai Street, Nanshan District, was acquired by Poly for 5.77 billion yuan after 291 rounds of bidding, with a floor price of 108,700 yuan per square meter—29% higher than the previous year's land king record.
- Hangzhou: The Yongjiu River plot in Binjiang District attracted competition from 12 real estate companies over 243 rounds, with a floor price of 51,600 yuan per square meter, setting a new high for residential land transactions in Hangzhou during the first half of the year.
- Suzhou: A residential plot by Jinji Lake saw 74 rounds of bidding, resulting in a floor price of 69,000 yuan per square meter, making it the most expensive residential plot in Suzhou and Jiangsu.
These "land kings" share three common characteristics: they are located in core areas (e.g., Yuehai in Shenzhen is a technology hub, and Jinji Lake in Suzhou is an affluent area), have low density (allowing for the construction of large apartment buildings or villas with high resale values), and are small in size (reducing the risk for real estate companies).
The premium rates were even more astonishing: the average premium rate across 15 cities was 13.2% in the first half of the year, rising to 30% in June; in first-tier cities, the premium rate reached a staggering 63%—meaning real estate companies were willing to pay more than 60% above the base price for these plots.
Why Are Real Estate Companies Competing for Land Kings?
It's not about blindly betting on price increases; rather, it's about seeking certainty:
- On the supply side: The government is no longer offering subpar land but only high-quality plots in core areas, making them highly sought after due to scarcity.
- On the real estate company side: The housing market is generally unstable, and many properties are difficult to sell. Companies are cautious about acquiring land, preferring to invest in locations where demand is certain and stable, even in the face of market fluctuations.
- Profit margins have improved: Price controls have been relaxed this year, allowing for higher prices for premium products. Additionally, policies that favor quality housing encourage companies to produce such products, making them more profitable.
However, there are concerns: some cities have price ceilings imposed by the government, and if land prices are too high, profits could be slim after deducting construction costs. If the quality of the delivered properties fails to meet expectations, losses can be significant.
National Land Auction Market Trends: Shrinking and Cooling Down
In contrast to the heat in core cities, the national land auction market is contracting:
- The supply and transaction volume of residential land have decreased by about 20% across 300 cities, with land transfer fees dropping by 30%.
- Land markets in third- and fourth-tier cities are almost inactive, with many plots failing to sell or seeing declining prices. The average floor price for pure residential land nationwide has decreased by 16%, with first- and second-tier cities experiencing declines of 13.8% and 11%, respectively.
This is because third- and fourth-tier cities previously oversupplied land, and now they are trying to reduce inventory; coupled with a decline in population, there is less demand for housing, leading real estate companies to avoid investing in these areas. This indicates that the "land king" trend is a localized phenomenon and does not represent a nationwide recovery in the housing market.
Who Is Buying Land?
State-owned and central enterprises are taking the lead in land acquisitions this year:
- They accounted for 54% of land purchases in 22 cities, with a higher proportion (over 60%) in first-tier cities like Beijing and Shanghai.
- Local state-owned assets accounted for 25%, a decrease of 6 percentage points from last year, suggesting that local governments are less supportive of the land market.
- Private companies only accounted for 17%, still a low figure due to significant losses and limited financial resources.
This suggests that the current land auction market is dominated by state-owned entities, while private companies are still recovering and unlikely to return to their previous levels of activity in the short term.
Future Trends for Land Auctions
The direction for future land auctions is clear:
- On the supply side: The government will continue to control the quantity and improve the quality of land supplied, selling fewer but higher-quality plots to stabilize market expectations.
- Core cities: More high-quality plots in first-tier and key second-tier cities will be made available, maintaining their popularity.
- Non-core areas: Land markets in third- and fourth-tier cities as well as suburban areas of first- and second-tier cities will remain cold, with more plots likely to fail to sell.
In summary, the polarization in land auctions will become even more pronounced: only the best locations will attract fierce competition, while less desirable areas will see little interest.
In One Sentence
The "ice and fire" situation in the land auction market in the first half of 2026 reflects a deep adjustment in the housing industry. Only core plots in key cities offer real estate companies a guaranteed opportunity for survival, while markets in other regions will face more challenges. For individuals considering buying property, high-quality properties in core areas of core cities are likely to maintain their value over time, while those in third- and fourth-tier cities should be approached with caution.