• Firms snap up land parcels for 20% above the asking price
• Governments spark deals by scrapping limits on home value

Chinese state-backed developers are starting to buy land at a premium again after the government eased limits on home prices to revive a slumping market that’s been a drag on the economy for more than four years.

The number of land parcels that sold for at least 20% above the asking price accounted for 37% of deals this year, according to a Bloomberg analysis of transactions worth at least 1 billion yuan ($138 million) tracked by China Index Academy. That compares with just 14% for all of last year and 4.6% in 2023.

Seven out of the 10 transactions this year involved state buyers, including China Resources Land Ltd., China Overseas Land & Investment Ltd., Poly Developments and Holdings Group Co., and mixed-ownership firm Greentown China Holdings Ltd.

State-Backed Buyers Drive Land Sales Recovery

Share of high-premium land transactions involving state-backed developers

Source: China Index Academy data analyzed by Bloomberg

Note: 2025 data as of Feb. 17. Only land sales worth at least one billion yuan are analyzed. High premiums refer to land plots sold at 20% premium or more.

The renewed interest in land deals signals some state-backed developers are betting on an eventual rebound in the housing market, even as sales and prices continue to slide on weak consumer confidence. While not a full recovery, it’s the latest sign that China’s property market is stabilizing.

Read more: China New-Home Prices Barely Fall in Sign Market Stabilizing

Local provinces are facing increased financial pressure due to dwindling land sales in recent years. Government revenue from these transactions plummeted 16% last year, worsening 2.8 percentage points compared with the previous year.

In response, more cities are encouraging land purchases by easing terms, including relaxing limits on how much profit developers can make selling new homes. Many cities scrapped price guidance in the second half of last year to encourage such moves.

“While the land market hasn’t shown a full turnaround, some cities are starting to see red-hot bidding over parcels,” said Xie Yangchun, an analyst at China Real Estate Information Corp. “That’s because stringent limits on home prices ended last year.”

China Sees More Competitive Bidding for Land Plots

Share of parcels sold at 20% premium or more

Source: China Index Academy data analyzed by Bloomberg

Note: 2025 data as of Feb. 17. Only land sales worth at least one billion yuan are analyzed.

To be sure, the number of land transactions worth more than 1 billion yuan is still below pre-downturn levels. Most of the land parcels sold are small, according to China Real Estate Information.

The latest improvement follows pledges from the country’s top leaders, who vowed to stem the decline in the real estate market in late September. That’s prompted more developers to compete for quality land parcels, especially in economic hubs such as Shanghai and nearby Hangzhou.

Before China’s property crisis, the government sought to temper sky-high home prices by attaching strings to land sales, often limiting maximum selling prices before homes were even built.

In some cases, the guidance was specific. Changsha, the capital of central Hunan province, stipulated that developers’ profits shouldn’t exceed single-digits relative to the land cost.

In November, Beijing stopped setting an upper limit for home prices when it auctioned a residential land parcel, the first time it’s done that in more than three years. State giant China Overseas Land & Investment splurged 11 billion yuan on it.

High Premium Land Sales Occur in Economic Hubs

Hangzhou stood out with five plots sold at 20% premium or more in 2025

State-owned developers may continue to drive land sales as they lay the groundwork for reinvestment, according to Bloomberg Intelligence’s Andrew Chan and Daniel Fan.

In June last year, Shanghai eased land-buying rules by removing similar curbs. Soon after that, the city sold the country’s most expensive land plot by unit prices. The same is happening in the neighboring city of Hangzhou.

“Hangzhou’s decision to revise development guidelines on a plot of land to make terms more favorable may signal a willingness by local government to incentivize buying by developers,” said Chan and Fan.