"Not granting land to real estate" is a misreading; officials provide detailed explanation of new land supply policy

“Controlling growth with stock, a new logic for land supply in China.”

Recently, the Ministry of Natural Resources and the National Forestry and Grassland Administration jointly issued a notice emphasizing the need to further ensure natural resource elements. Among the most attention-grabbing points are: first, linking the activation of existing land with new construction land; second, prioritizing major projects and public welfare development when allocating new construction land, which in principle will not be used for commercial real estate development.

This new land supply logic was once misunderstood as “no longer approving land for real estate projects.” The official explanation from the Ministry of Natural Resources states that in principle, new construction land will not be used for commercial real estate development, but this does not mean no land will be supplied for real estate. Instead, the focus is on efficiently and selectively utilizing existing resources, implementing city-specific policies, and controlling the pace and timing of land supply.

Currently, after preliminary arrangements, the reserve of state-owned construction land is sufficient to meet normal development needs. The pace of land supply through bidding and auction will remain unchanged and is not directly related to the trends in new and second-hand housing markets. However, linking new construction land with the activation of existing stock will promote urban development from reliance on new land to revitalizing existing space.

“Not approving land for real estate projects” is a misunderstanding.

On March 16, the Ministry of Natural Resources held a press conference to introduce and interpret the spirit of the “Notice on Further Ensuring Natural Resource Elements” (Natural Resources Development [2026] No. 38).

The notice states that provinces (autonomous regions, municipalities) should establish and improve mechanisms linking new construction land with the activation of existing land. In principle, the annual new urban and rural construction land should not exceed the area of activated existing land. Priority should be given to major projects and public welfare development, and in principle, it should not be used for commercial real estate development.

How should we understand the phrase “new construction land in principle will not be used for commercial real estate development”?

The Ministry of Natural Resources explains that China’s basic national condition is that land is scarce and people are numerous. Land resource allocation must balance three accounts: market benefits, national development, and people’s welfare. The best land should be used for key infrastructure and public welfare projects.

At the same time, given the significant changes in the real estate market supply and demand, the document clarifies that in principle, new construction land will not be used for commercial real estate development. This does not mean no land will be supplied for real estate; rather, it emphasizes the efficient and prioritized use of existing stock resources, implementing city-specific policies to control the rhythm and timing of land supply, and prioritizing areas with advantageous locations and complete supporting facilities.

CCTV News states that “new construction land” specifically refers to land converted from agricultural land or unused land into construction land. It is a scarce and strictly controlled indicator, prioritized for public welfare projects and major industrial projects, which is reasonable. Currently, most land for real estate development comes from existing stock, such as old city renovations, low-efficiency land redevelopment, urban village transformations, and government reserves of state-owned land. In many large cities, land supply for real estate mainly relies on stock, with very little new land being allocated.

CCTV News also notes, “After preliminary arrangements, the reserve of state-owned construction land is sufficient to meet normal development needs. The pace of land supply through bidding and auction will not change, and it is not directly related to the trends in new and second-hand housing markets.”

The China Index Academy states that land is categorized into agricultural land, construction land, and unused land (such as saline-alkali land, marshes, etc.). In simple terms, converting agricultural or unused land into construction land constitutes new construction land. Stock land includes approved but unissued land, idle land, low-efficiency land, and land involved in urban renewal (including urban villages). Commercial real estate includes types such as commercial, office, and residential properties.

The academy says that, in principle, new construction land will not be used for commercial real estate development. This does not mean no land will be supplied for real estate; it indicates that the policy will have limited short-term impact on land supply through bidding and auction markets. The policy emphasizes “efficient and prioritized supply,” encouraging enterprises to acquire high-quality plots, supply higher-quality housing, and promote high-quality real estate development.

According to data from the National Bureau of Statistics, as of February 2026, the total area of unsold commercial residential properties (completed but not sold) nationwide was 440 million square meters, with a clearance cycle exceeding 20 months. Data from China Index Academy shows that in 50 key cities, the clearance cycle for available residential properties exceeds 20 months, considering the scale of land under construction but not yet approved or started. Currently, the inventory of new homes in the market remains substantial.

The China Index Academy states that the principle of not using new construction land for commercial real estate development will reduce land supply at the source, helping to improve the supply-demand relationship in the real estate market and stabilize it.

In the long term, the scale of land supply for real estate in China will coordinate with stock housing and demographic changes.

E-House Research Institute notes that last year, the Ministry of Natural Resources and the Ministry of Housing and Urban-Rural Development conducted a survey of land inventory across the country. They found that the scale of undeveloped stock land (especially for real estate) is large, including approved but unissued land, unused land, and low-efficiency plots, many of which can be utilized for 5-10 years, mainly in peripheral areas. Additionally, population movement in large and medium cities shows a trend of returning to central districts, requiring adjustments in land supply to match the trends in existing housing and population.

Linking incremental land with stock activation.

Another key policy point in the “Notice” is establishing and improving mechanisms that connect new construction land with the activation of existing land. In principle, the annual new urban and rural construction land should not exceed the area of activated existing land.

What is the purpose and impact of linking new construction land with stock activation?

The Ministry of Natural Resources explains that urban construction land includes both new land created through expropriation and land converted from other uses, as well as stock land revitalized through urban renewal, redevelopment, and reclaiming idle land. Both sources constitute the land supply for economic and social development. Except for projects related to energy, transportation, and water conservancy, the annual new land supply should not exceed the area of activated stock land. Simply put, “one acre of activated stock land allows for one acre of new land.”

“Through good coordination of stock and incremental land, this policy prevents disorderly urban expansion and promotes a shift from dependence on new land to revitalizing existing space,” states the Ministry.

The China Index Academy states that linking new land with stock activation, and generally not using it for commercial real estate development, aims to promote connotative urban development and avoid sprawling growth. The recently released “14th Five-Year Plan” outline also emphasizes increasing efforts to activate stock land and includes multiple measures and directions for doing so.

According to monitoring by the China Index, by the end of February 2026, 28 provinces and cities had announced plans to use special bonds to acquire idle stock land, with a total amount exceeding 770 billion yuan. Actual issuance of these bonds exceeded 335 billion yuan, accounting for about 43%. In the future, local governments are expected to accelerate the storage and acquisition of idle land through planning adjustments and land exchanges to meet market demand.

E-House Research Institute points out that land that has been allocated but not developed, as well as ongoing projects, are part of medium- to long-term inventories. Many of these lands, with early-stage planning and approval, are not suitable for current high-quality housing needs. Especially in recent years, land sales have been highly cost-effective, leading to a depreciation of pre-sold but undeveloped land and ongoing projects, making them less competitive in the market.

The “14th Five-Year Plan” outline proposes categorizing and disposing of land that has been allocated but not developed, promoting the activation of stock commercial and office properties, and adjusting planning and land use to facilitate sales and reorganization, combined with new business models, industries, and consumption patterns.

Recently, the Jiangsu Provincial Department of Natural Resources released typical cases of stock land activation. For example, in Wuxi, the “Hongshu East Plot” and “Yangxi Park City No. 82 Plot” were originally acquired by two local state-owned enterprises. Based on current market conditions, they re-analyzed the surrounding infrastructure, existing housing structures, and buyer preferences, and optimized the plans to “reduce density and increase amenities.”

Wuxi then used city-level incentives to acquire and re-issue land, adjusting planning conditions and design requirements. The plot ratio of Hongshu East was reduced from 1.8 to 1.2, and Yangxi Park City No. 82 from 2.2 to 1.5, shifting from “high-density, high-rise, affordable housing” to “low-density, improved-type residential community.” After re-listing, these plots successfully attracted social capital, resolving the idle risk of land worth over 4.6 billion yuan under the original contract.

It is worth noting that linking new construction land with stock activation poses a challenge for some lower-tier cities.

Song Hongwei, Co-Director of the SouFun Research Institute, states that for many lower-tier cities, especially those with weak industries, population outflow, and high dependence on land transfer income, activating stock assets is already difficult. The new land supply policies may further reduce the amount of land available for sale in the future.

He believes that during the “14th Five-Year Plan” period, the land supply policy has fundamentally shifted to follow the principles of “activating stock, supply based on demand, and prioritizing stock,” which helps address the root causes of inventory issues. In the long run, this also encourages some cities to move away from relying on land finance and to revitalize the real economy.