China Index Research Institute: New Deal Reshapes Real Estate Enterprises' Investment and Land Acquisition Logic Land Auction Shows Characteristics of Prudent Investments and Preference for Small to Medium Size Plots

The Zhitong Finance App learned that the China Index Research Institute published an article stating that the “8.28 New Deal” pre-sale conditions were raised and the repayment node was moved backwards, which significantly lengthened the project's capital occupation cycle from land acquisition to repayment, significantly increased the risk of removal, and the risk of land acquisition by housing enterprises increased significantly. If the site selection is wrong, a huge amount of capital will be deposited. In terms of the investment model, as calculation assumptions such as removal nodes and repayment nodes change, the project capital flow is reshaped, and the investment calculation model needs to be restructured. In terms of land acquisition cities, the investment logic of housing enterprises will further focus on the certainty of land removal, and land acquisition will converge to the core area of the core city, small in size, low total price, quick completion, and low floor area ratio.

In the competitive landscape, leading central state-owned enterprises and regionally deeply cultivated private enterprises have strong low financing costs and product delivery capabilities, and their market share is expected to increase further. The premium rate for land has moved downward, but core plots will still maintain high premiums. Therefore, focusing on core plots in core cities may face the risk of rising premium rates and increased costs, which in turn requires product premium capacity. In terms of land acquisition methods, consortium land acquisition is gradually being normalized, especially on land plots with higher total prices and larger volumes.

Figure: Changes in the logic of investment and land acquisition after the New Deal

After the New Deal, housing enterprises were more cautious in investing, and the decline in the amount of land acquired by TOP100 housing enterprises increased. Under the influence of the New Deal, housing enterprises are more cautious in investing, and the decline in land acquisition amounts for TOP100 companies has increased. From January to September 2026, the total amount of land acquired by 100 housing enterprises was 578.5 billion yuan, a year-on-year decrease of 20.5%. After the decline narrowed for 6 consecutive months, the decline increased by 2.7 percentage points. With the implementation of the 8.28 New Deal, the funding threshold for land acquisition and development for housing enterprises was raised. Housing enterprises were more cautious about investing in land acquisition in September, leading to an increase in the amount of land acquired.

Figure: Total cumulative land acquisition volume of 100 housing enterprises from 2023 to 2026 and the year-on-year ratio

The intensity of land acquisition by leading housing enterprises has remained stable. In January-September, the average land acquisition sales ratio of TOP10 housing enterprises was 48%, an increase of 1 percentage point over January-August, and the intensity of land acquisition remained stable. Among them, the amount of land acquired by Poly Development, China Resources Land, and Yuexiu Real Estate increased significantly over the same period last year. The land acquisition ratio was also high, and the investment and land acquisition efforts were strong.

Housing enterprises tend to acquire land for small to medium sized plots with a controllable total price, and more consortium land for large or high total price plots. In September, 31 enterprises acquired more than 1 billion square meters of land, accounting for 18% of the number of land plots with a planned construction area of less than 5 square meters; the maximum number of parcels of 5-10 million square meters accounted for 39%, which is more popular among housing enterprises; the number of parcels of 11-150,000 square meters accounted for 23%. Due to the high total price, most of the land sold in Shanghai was consortium land. The Jing'an Daning plot was consortised for 7.050 billion yuan by C&D Real Estate, and the Minhang Gumei plot was jointly contested by China Merchants Shekou, Nanshan Holdings, and Binjiang Group for 6.416 billion yuan.

Figure: Percentage of land acquisitions by land area of 31 housing enterprises in September 2026

Investment and land acquisition strategy: use fixed investment, accurately select cities, and select “short, small, fast and determined” plots

1. The pace of land acquisition: Total restraint, replace “fixed investment with money” with “fixed investment with sales”

The core variables in the pace of land acquisition after the New Deal have changed from “availability of financing” to “sales repayment and cash flow safety.” In the pre-sale era, land payments can be quickly replaced with pre-sale payments. The prerequisite for land acquisition is whether money can be obtained; in the era of current housing sales, land payments must be paid with own funds, and repayment must wait until completion. This changed “fixed investment with sales” from a management slogan to a hard constraint: the size of land that can be acquired is determined not by the capital pool, but by the sales repayment that can be achieved in the next two to three years. The starting point of budgeting is a reduction forecast rather than a financing amount.

Figure: Core variable switching in the rhythm of land acquisition after the New Deal

2. Urban layout: replace casting a wide net with “1 base plus N cities of opportunity”

The base city must meet three conditions at the same time: first, the new housing removal cycle is less than 18 months; second, the scale of residential land concession funds is among the highest in the country and the pace of land supply is stable to avoid “no land to obtain” due to supply disruptions; and then, the enterprise already has a delivery record and market share base. According to the 2026 structure, Shanghai, Hangzhou, Beijing, Chengdu, and Shenzhen rank among the top in terms of concession fund size and premium rate, forming the main candidate pool. Among them, those with leading concessions and controlled premium rates are more cost-effective.

Figure: Filter logic based on local city

City selection criteria should focus on the overall demand for housing. In January-September, 617.46 million square meters of second-hand housing were registered online, an increase of 10.7% over the previous year. The number of second-hand housing online registrations in many places has already surpassed that of newly built commercial housing. The decline in new housing in some cities is not a disappearance of demand; rather, demand is shifting to stock housing. The “what you see is what you get” of existing homes is naturally attractive to replacement customers, but the pricing of new homes must be reasonably compared to second-hand housing in the same sector, and there is no longer any pricing space to rely on price limit dividends.

3. Land plot selection: rewrite land acquisition estimates using the four principles of “short, small, fast, and definite”

The first principle of plot selection is “short”, which reduces the absolute time from land acquisition to completion. The conditions for starting the sale of an existing house are completion and acceptance and delivery conditions. The development cycle directly determines the time required for capital and financial costs. Low-density plots with a floor area ratio of less than 2.0 have structural advantages and are easier to complete within 24 to 30 months. The second principle is “small”, that is, controlling the total price of a single transaction. After the New Deal, the market has formed a consensus to “control the total price and share the risk”; the total price of a single transaction is controlled within 15% of the annual equity and land acquisition budget, which can prevent individual project mistakes from turning into liquidity events at the company level. The third principle is “fast,” that is, lock in the speed of removal. The quantitative standard is that the sector inventory removal cycle is less than 15 months and that supporting facilities such as subways are ready. The fourth principle is “determination”, which gives priority to the selection of land whose sales certainty is put ahead of the system. Land plots that account for more than 60% of the targeted repurchases and resettlement of properties are high-quality targets: this part of the removal does not depend on the market, which is equivalent to using government credit to advance a layer of cash flow, and the remaining saleable portion will not break the overall cash flow even if it is slow.

Figure: Four principles for plot selection

4. Risk prevention and control: Focus on five types of risks to prevent risk transmission along the capital chain

The risk under the existing housing model is no longer a single point; it is transmitted along the capital chain. The same amount of capital is repeatedly used on the four nodes of land acquisition, construction commencement, completion, and current sale, and delays at any node will be amplified backwards. The focus of prevention and control is not to identify more risks, but rather to identify transmission pathways, classify risks by source, rank them by impact, and set up cards by node. Comprehensive ratings cannot be used to cover up structural problems.

Table: Investment and land acquisition under existing housing sales focus on five types of risks