Kerui Real Estate: From January to February, the total construction area of the country's pre-supplied land fell 35.5% year on year, highlighting the resilience of first-tier cities

The Zhitong Finance App learned that in January-February 2025, Kerui Real Estate published an article stating that in January-February 2025, the total construction area of the country's pre-supplied land decreased by 35.5% year-on-year, and the land area used decreased by 37.5%, continuing the contraction trend since 2023. Initial land pre-supply data shows that the real estate supply side is undergoing a series of positive adjustments: first-tier and core second-tier cities strengthen market confidence by optimizing land supply structures, third- and fourth-tier cities use contraction strategies to relieve inventory pressure, and the national land supply rhythm is becoming more efficient.

Specifically, look at the energy levels of cities:

“Stable quantity and quality increase” in first-tier cities: The supply and construction surface increased by 3%, mainly due to Guangzhou's advance land supply announcement in 2025, and the pre-supply land construction area in Beijing and Shanghai in early 2025 falling 20% year-on-year. In 2025, Beijing and Shanghai will continue to increase the land supply ratio in core high-quality regions to achieve a balance between social benefits and land value. For example, in early 2025, the average land supply ratio in Shanghai dropped from 1.87 to 1.78, further increasing the share of high-quality land supply. Very few high floor area ratio projects are also urban core plots. Typical residential land in Hongkou District with a floor area ratio of 3.95 sold a high premium rate of close to 40% in February.

“Growth and decrease differentiation” in second-tier cities: the overall pre-supply construction area fell by an average of 24%, with significant differentiation between cities. In the Yangtze River Delta urban agglomeration, the scale of land supply such as Hangzhou, Hefei, and Ningbo all bucked the trend; while some cities in Northeast China and North China (such as Harbin -42% and Shijiazhuang -62%) declined due to inventory adjustment demand.

It is worth noting that the average land supply volume ratio for second-tier cities reached 2.2, the highest among all energy level cities (2.05 for first-tier cities and 2.06 for third-tier cities). Although “low density and high quality” have become popular in the new housing market in recent years, due to restrictions on urban residential land use indicators and sector inventory pressure, second-tier cities have limited reserves of high-quality and low-density land. Among them, it is even more difficult to achieve a volume ratio of less than 2.0 for land reserves in the old remodeled sector. With the exception of cities such as Suzhou and Nanjing, which are concentrated in peripheral sectors, the average floor area ratio of 2/3 of the cities is still above 2.0. For example, Hangzhou, which frequently photographs high-premium residential land, has also reached 2.2. Typically, the average floor area ratio of Chengdu and Xi'an has reached 2.5 or more.

Third- and fourth-tier cities “take the initiative to clear”: The area of pre-supplied land construction fell 39% year over year, the biggest drop for cities at all energy levels. Over 60%, the scale of pre-supplied land fell by more than 40% in third- and fourth-tier cities. Some cities even suspended the supply of residential land at the beginning of the year, making full use of the incremental space of the 2025 local debt ceiling, responding positively to the Ministry of Finance's policy of strictly controlling hidden debts of local governments, and freeing up development space for the reuse of urban land stocks.

The third and fourth lines are speeding up the pace of pre-announcements, and expected management strengthens market confidence

In the January-February 2025 land supply project, thanks to the acceleration in the pace of pre-announcements in third- and fourth-tier cities, 96% of the deadlines were already concentrated before the end of May, an increase of 9 percentage points over the same period in 2024. Typical pre-announcement deadlines for cities such as Xianyang, Huanggang, and Tieling in early 2025 were brought forward to the end of the first half of the year. Reducing the announcement cycle of the pre-supply list helps strengthen the management of expectations and avoid a long backlog of “land to be entered” on the supply side, which positively affects investors' confidence; on the other hand, completing land sales in the first half of the year to ensure that land concession funds are included in the annual budget also helps local governments improve the turnover efficiency of production factors such as land and capital. However, for some third- and fourth-tier cities, where the market is relatively sluggish, it is also a test of the city's ability to attract investment itself.

Furthermore, it is worth noting that Tier 1 and 2 cities have also accelerated the pace of implementation of pre-land supply and are continuously optimizing the scale of a single land supply. For example, Beijing and Shanghai all carried out the first round of land supply in January in 2025. They were traded in February, one month earlier than in previous years. Hangzhou implements small-batch rolling supply. With the exception of land supply at the end of the year, the vast majority of land supplies are controlled within 300,000 square meters, maintaining market popularity.

The differentiation of major cities intensifies the expansion of pre-supply in Shanghai and Hangzhou against the market

Looking at the performance of major cities:

Shanghai controlled quantity and improved quality. At the beginning of 2025, the pre-supply of land was announced to be 720,000 square meters, an increase of 13% over the previous year, and the average floor area ratio dropped from 1.87 to 1.78. Continue to focus on high-quality residential land in the main city and low-density residential land in the suburban industrial sector. Typical examples include Zizhu in Jiangchuan, Minhang, and two new industrial residential land with a floor area ratio of only 1.01. The starting price is 35,000 yuan/square meter. The price of target low-density villas is generally above 100,000 yuan/square meter, which will fill the gap in demand for high-end low-density improvements within the sector.

Beijing has fulfilled the land supply plan target. At the beginning of 2025, the pre-land supply announcement scale was 350,000 square meters, a decrease of 51% over the previous year. In 2025, Beijing first proposed flexible land supply. The commercial residential land supply was adjusted from “no less than 300 hectares” in 2024 to 240-300 hectares in 2025, further controlling the scale of residential land supply.

Cities such as Hangzhou, Hefei, and Ningbo expanded against the market. Since the fourth quarter of 2024, thanks to the lifting of price limits for new homes, land plots with high premiums and high total prices of 50% or more have repeatedly appeared in Hangzhou Land Sale. In the context of a hot market, the scale of pre-supply land in Hangzhou increased by 60% year-on-year in early 2025. It is also reasonable to launch more pre-supply lists for enterprises to select. Zhengzhou, Hefei, etc. have strengthened the supply of low-density, high-quality land plots such as urban renewal and integration of industry and city. Typically, the average floor area ratio announced in Zhengzhou dropped from 3.0 in early 2024 to 2.5 in early 2025. Ningbo, on the other hand, is mainly related to the accelerated pace of land supply for guaranteed housing. For example, plot No. 7 in Yinzhou District on the Ningbo pre-supply land list has a planned construction area of 450,000 square meters, of which resettlement housing accounts for about two-thirds.

Cities such as Xi'an, Harbin, and Tianjin have shrunk deeply. Typical example is that Xi'an announced 670,000 square meters of residential land in early 2025, a decrease of 90% over the previous year. Xi'an's current digestion cycle is still within 18 months. As one of the few cities with healthy indicators of supply and demand, it is also actively reducing the scale of pre-supply land to make it similar to the scale of transactions in the new housing market in order to stabilize market expectations. Cities such as Harbin and Shijiazhuang, which are facing challenges in inventory removal, are also drastically reducing the scale of pre-allocated land. With the 2024 base in Chongqing already low, the pre-supply scale of land continued to drop by 25% to 580,000 square meters in early 2025, which is already about 20% lower than the rate of new housing transactions in the city.

There are also a few cities that have issued advance land supply announcements before 2024, such as Guangzhou, Nanjing, Changchun, Chengdu, and Xiamen. Among them, the Guangzhou and Chengdu markets are very popular. Hot land has been auctioned frequently in the past six months. Early land supply announcements in 2025 will help to meet market popularity and stabilize market development expectations. As for Changchun and Nanjing, the pre-supply list is mostly concentrated in regions with clear transaction expectations. For example, Changchun is highly concentrated in the new district of Changchun and Jiaoxian counties at the national level, while Nanjing is mainly concentrated in the remote Lishui and Liuhe sectors, which have little impact on supply and demand expectations for the “main battleground” of the city. Xiamen, on the other hand, announced the 2025 land supply plan earlier. The plan is to supply 90 hectares of residential land, a year-on-year decrease of 44.6%.

In addition, land transaction data at the beginning of the year also gave positive feedback: the average premium rate for operational land reached 11% in February 2025 — the premium rate exceeded 10% for the first time since entering the adjustment period in the second half of 2021.