The year 2024 is already more than half over. Although the land market has shown a "patchy recovery," real estate developers' investment in land acquisition has not improved significantly.

Data from CRIC shows that in the first half of 2024, the total land acquisition amount of the "Top 100 real estate developers by investment" was 420.4 billion yuan, a year-on-year decrease of 40%, the largest decline since 2023. Since the beginning of this year, the decline in land acquisition amounts of the "Top 100 real estate developers by sales" has formed a sharp contrast with these developers' sales performance rankings.

From the financing side, according to statistics from the China Index Academy, in the first half of the year, the total bond financing of real estate enterprises was approximately 282.29 billion yuan, a year-on-year decrease of 26.1%. Among credit bonds, the issuance scale of central and state-owned enterprises accounted for 93%, an increase of 3 percentage points from the same period last year; the issuance scale share of private and mixed-ownership real estate enterprises declined significantly compared with the same period last year.

"The scale of real estate investment is mainly related to land acquisition and construction. At present, the floor area under construction and the scale of land acquisition by real estate enterprises are continuing to decline. Data from the National Bureau of Statistics shows that in the first five months, national real estate development investment was 4,063.2 billion yuan, a year-on-year decrease of 10.1%. Therefore, the scale of real estate investment in the coming months is still not optimistic." On July 3, Liu Shui, research director of enterprise research at the China Index Academy, pointed out in an interview with a reporter from Daily Economic News that in the second half of the year, the year-on-year decline in development investment scale may narrow, but the full-year investment performance is expected to remain weak.

　　Land supply and demand shrink, real estate developers' investment in land acquisition follows "living within one's means"

According to monitoring data from the Zhuge Data Research Center, in the first half of the year, the planned gross floor area of national land supply was 150.89 million square meters, down 40.7% year on year; the planned gross floor area of transactions was 115.111 million square meters, down 36.8% year on year; the transaction floor price was 4,893 yuan per square meter, down 17.1% year on year.

Statistics from the China Index Academy show that in the first half of the year, 20 of the 22 key cities nationwide released their 2024 land supply plans, and the overall land supply scale decreased by about 10% year on year. Among them, first-tier cities saw the largest supply reduction, reaching 60%, but with the average floor price rising 12.5%, the decline in land transfer fees was reduced to 37%; in second-tier cities, land supply area, transaction area, and land transfer fees all fell by more than 40% year on year; third-tier cities saw the largest decline in average floor price, reaching 15.3%, which, combined with the reduction in transaction area, led to a 44.3% year-on-year decline in land transfer fee scale.

From a regional perspective, in the first half of the year, the top 10 real estate developers in the Yangtze River Delta acquired land worth 77.6 billion yuan, continuing to lead the four major city clusters; the top 10 enterprises in the Beijing-Tianjin-Hebei region acquired land worth 74.9 billion yuan, ranking second; the top 10 enterprises in the central and western regions and the Greater Bay Area acquired land worth 32.6 billion yuan and 26.4 billion yuan, respectively.

Specifically by city, in the first half of the year, high-quality plots in Shanghai, Hangzhou, Beijing, Chengdu, Ningbo, Changsha, and other places were in high demand, with many plots reaching the price ceiling or having premium rates above 30%. In the first quarter of this year, the monthly land transaction premium rates in the 22 cities were all above 8.5%; starting from the second quarter, differentiation in land auctions among cities intensified, and transaction premium rates continued to decline, with only some plots in Shanghai, Hangzhou, Chengdu, and other places still able to achieve high premiums.

It is worth noting that in the first half of the year, only 30% of the top 100 real estate developers by sales acquired land, and some leading central and state-owned enterprises also significantly slowed their pace of investment in land acquisition.

According to statistics from the China Index Academy, in the first half of the year, the total land acquisition amount of the top 100 enterprises was 380.1 billion yuan, a year-on-year decrease of 35.8%. Among them, only Jianfa Real Estate and Zhongjian Yipin had attributable land acquisition amounts exceeding 20 billion yuan, and both are central or state-owned enterprises; there were 10 real estate developers with attributable land acquisition amounts exceeding 10 billion yuan, the vast majority of which were also central or state-owned enterprises.

From the list of newly added saleable value, in the first half of the year, only Jianfa Real Estate had newly added saleable value exceeding 50 billion yuan on a full-caliber basis, and 10 real estate developers had newly added saleable value exceeding 20 billion yuan. Jianfa Real Estate, China Resources Land, and Zhongjian Yipin ranked the top three on the newly added saleable value list with 51.3 billion yuan, 37.4 billion yuan, and 41 billion yuan, respectively. The total attributable newly added saleable value of the top 10 real estate developers was 322.9 billion yuan, accounting for 36% of the total of the top 100 enterprises (889.6 billion yuan).

At the same time, the land acquisition-to-sales ratio of the top 100 real estate developers continued to decline. According to CRIC statistics, in the first half of the year, the land acquisition-to-sales ratio of the "Top 100 real estate developers by sales" fell to 0.14, down 0.01 quarter on quarter; the land acquisition-to-sales ratio of the top 10 real estate developers was 0.15, and the land acquisition-to-sales ratios of all tiers hovered at low levels.

In particular, for leading real estate developers, the decline in land acquisition amounts since the beginning of this year has formed a sharp contrast with their sales performance rankings. Among them, Poly Developments' land acquisition amount fell 70% year on year, China Overseas Land & Investment fell 73%, and China Vanke fell 94%. By comparison, real estate developers such as Jianfa Real Estate, Longfor Group, Greentown China, and Binjiang Group were relatively active in land acquisition, and their land acquisition-to-sales ratios also remained above the industry average.

According to monitoring data from the Zhuge Data Research Center, in the first half of this year, central and state-owned enterprises accounted for 40% of attributable land acquisition amount, flat compared with 2023; local urban investment platforms accounted for 42%, down from 44% last year; private real estate developers accounted for the smallest share, at 18%.

The reporter from Daily Economic News noted that, constrained by reduced land supply and funding pressure, "living within one's means and determining investment by sales" has become the current land acquisition investment strategy for most real estate developers.

Taking Longfor Group as an example, in the first half of the year, the company acquired a total of 7 plots in 7 cities including Beijing, Shanghai, Hangzhou, and Chengdu. For example, the plot located in Shanghai Fengxian New City is adjacent to the subway, and Longfor Group had previously developed multiple residential projects such as Chunjiang Tianxi and Tianjie projects in this area; in Chengdu, the plot within the First Ring Road in Jinniu District acquired by Longfor Group is located in the core area of the Rongbei business district, with well-developed urban supporting facilities such as transportation, commerce, education, and medical care.

At the shareholders' meeting in June, Longfor Group's management revealed that the company's land acquisition strategy is to "determine expenditure by sales," strictly adhere to discipline, select the best among the best, grasp the investment rhythm well, and focus highly on high-tier first- and second-tier cities.

Binjiang Group, which is deeply engaged in Hangzhou and the Zhejiang region, ranked fourth in the industry by attributable land acquisition amount in the first half of the year and sixth by attributable newly added saleable value. According to the WeChat public account of Binjiang Group, in the first half of the year, the company acquired a total of 10 plots, and 12 projects under the company newly started construction.

Entering June, the downward trend in real estate developers' investment was somewhat reversed. Data from 30 real estate developers closely monitored by CRIC shows that monthly investment amount was 28.8 billion yuan, up 101% quarter on quarter. The reasons are, on the one hand, the low base in May; on the other hand, core cities such as Nanjing and Hefei launched land in the middle of the year, attracting large-scale enterprises to participate actively. For example, central and state-owned enterprises such as Poly Developments, China Overseas Land & Investment, China Resources Land, and Jianfa Real Estate made efforts in core cities, and Jianfa Real Estate's single-month land acquisition amount exceeded 8 billion yuan.

　　Financing scale declines, real estate developers still face greater debt repayment pressure

From the financing side, in the first half of the year, the financing scale of real estate developers continued to decline. According to statistics from the China Index Academy, in the first half of the year, the total bond financing of real estate enterprises was approximately 282.29 billion yuan, a year-on-year decrease of 26.1%. Credit bonds fell 21.9% year on year, overseas bonds fell 54.8%, and ABS fell 33.3%. Among credit bonds, the issuance scale of central and state-owned enterprises accounted for 93%, an increase of 3 percentage points from the same period last year; the issuance scale shares of private real estate developers and mixed-ownership real estate developers both declined significantly compared with the same period last year.

In addition, according to CRIC data, based on the situation of 65 typical real estate developers, total financing in the first half of 2024 was 213.1 billion yuan, a year-on-year decrease of 37%; in terms of quarterly performance, the first and second quarters fell 41% and 32% year on year, respectively.

In terms of overseas bond issuance, CRIC data shows that in the first half of the year, only Yuexiu Property and Minmetals were monitored as each issuing one overseas bond, with coupon rates of 4% and 4.6%, respectively.

"Because the current real estate market has not improved significantly, financial institutions and others still have weak expectations for the industry. In the second half of the year, the financing scale of real estate developers may continue to decline. In addition, the more real estate developers finance, the more liabilities they have, and the greater the debt repayment pressure later. At present, most enterprises focus on prudent operation and will actively reduce the scale of liabilities and appropriately reduce financing." Liu Shui said.

At present, because most real estate developers that successfully obtain financing are prudently operating enterprises, financing costs have instead shown a sharp decline. Liu Shui pointed out: "In the first half of the year, the average interest rate on bond financing for real estate developers fell 0.7 percentage points from the same period last year to 3.1%, among which the average interest rates on credit bonds, overseas bonds, and ABS were 3.03%, 5.6%, and 3.09%, respectively, down 0.62, 1.66, and 0.66 percentage points from the same period last year."

According to CRIC statistics, in the first half of this year, the overall cost of newly added bond financing for real estate developers was 3.17%, down 0.43 percentage points from the full year of 2023.

In addition to financing, another aspect of real estate developers' funding pressure is the huge amount of debt, and real estate developers that have completed debt restructuring still face the risk of default again. CRIC statistics show that in the first half of the year, the maturity scale of real estate developers' bonds reached 279.9 billion yuan, of which the maturing bond scale in both the first and second quarters exceeded 130 billion yuan, and bond maturities in the third quarter will exceed 100 billion yuan. For enterprises that temporarily have no debt repayment pressure or have completed debt extensions and exchanges, they will also face the same debt pressure in the future. If the investment side, sales side, and financing side continue to show no improvement, real estate developers' debt pressure in 2025 may even be greater than in 2024.

Taking China Vanke as an example, after fully remitting US$612.6 million to repay the principal and interest of a maturing note, it has no maturing overseas debt this year. But for China Vanke, 2025 is the real challenge, with at least 24.6 billion yuan of maturing debt to be repaid cumulatively for the full year.

However, since May, a number of private real estate developers have announced successful financing. On May 14, New Hope Real Estate successfully issued its 2024 **th tranche medium-term notes, with an issuance scale of 800 million yuan; on May 17, Seazen Holdings successfully issued its 2024 **th tranche medium-term notes, with an issuance scale of 1.36 billion yuan; on May 29, Binjiang Group issued its 2024 third tranche short-term financing bonds, with an actual total issuance amount of 700 million yuan and an issuance interest rate of 3.6%.

It is worth mentioning that on June 20, S&P upgraded China Overseas Land & Investment's long-term issuer credit rating from "BBB+" to "A-", upgraded the long-term issue rating of the company's outstanding senior unsecured notes from "BBB+" to "A-", and at the same time upgraded the rating of its existing medium-term note program to "A-".

Liu Shui analyzed and pointed out that S&P's upgrade of China Overseas Land & Investment's rating first shows that international institutions' expectations for the development of China's real estate industry are improving; second, it sends a positive signal to the international capital market, which is conducive to international financing for real estate enterprises; third, this rating upgrade shows that China Overseas Land & Investment's operations have gained recognition and affirmation from international institutions, fully demonstrating the resilience and prudence of its operations.

In addition, since the beginning of this year, various regions have accelerated the implementation of the "whitelist" for real estate projects. According to statistics from the National Financial Regulatory Administration, as of May 16, commercial banks had approved "whitelist" project loans amounting to 935 billion yuan in accordance with internal approval procedures.

"The acceleration of whitelist loan approvals will help real estate developers' construction projects proceed and be completed." Liu Shui said.

The reporter from Daily Economic News found through review that the real estate financing coordination mechanisms in Guangdong, Hebei, Zhejiang, Henan, Fujian, Chongqing, Anhui, Jiangsu, and other places are operating smoothly. Some regions, after completing the push of the **st and second batches of "whitelist" projects, have already launched the screening and push of the third batch of projects.

From the enterprise level, taking CIFI Group as an example, as of July 3, the company had 72 projects nationwide included in the "whitelist" for real estate projects, 45 projects had received financing support, and 3 projects had obtained new financing.

The reporter learned from CIFI Group that the company's Wuhu Liujin Yinxiang project was the **st project approved for new financing, with an approved amount of 150 million yuan; the Beijing Guoxiang Yunzhu project, on the basis of previously obtained replacement financing, once again obtained new financing of 50 million yuan; the Taiyuan Jiangshan Yunyue project was approved for a new financing amount of 40 million yuan.

Regarding the trend of real estate development investment in the second half of the year, the China Index Academy expects that under the low base effect, the year-on-year decline in development investment scale may narrow in the second half of the year, but the full-year investment performance is expected to remain weak. As policies such as the project "whitelist" are further advanced, they may provide some support for investment.