17.25 billion "stop-loss orders": The economic account behind the repossession of three idle land parcels by OCT

A public notice of land acquisition puts China Overseas Land & Investment back in the spotlight.

Recently, the Hefei Natural Resources and Planning Bureau announced plans to use local government special bonds to recover three idle land parcels totaling 784.17 acres owned by subsidiaries of China Overseas Land & Investment, with a total purchase price of 1.725 billion yuan. Compared to the land cost of over 2.5 billion yuan, China Overseas will face an accounting loss of nearly 800 million yuan; this transaction is a typical example of local governments using special bonds to revitalize stock land, and also a “cutting losses” move by China Overseas after years of losses.

Three parcels acquired, nearly 800 million yuan in accounting losses

According to the Hefei Natural Resources and Planning Bureau, the three idle land parcels in Hefei Economic Development Zone are all owned by Hefei China Overseas Industrial Development Co., Ltd., covering a total of 784.17 acres. The land acquisition will be financed through local government special bonds.

The three parcels in Hefei Economic Development Zone to be recovered. Image / Hefei Natural Resources and Planning Bureau official website screenshot

Public information shows that the original planned uses for these three parcels were diverse, including commercial-residential, commercial, cultural, educational, and public service facilities. Among them, land parcel JK202105 covers 430.34 acres and was originally planned as a mixed-use area with residential, commercial, and cultural facilities—this is the largest of the three, intended to develop a comprehensive community with commercial and cultural amenities; JK202106 covers 84.46 acres and was designated as pure residential land; JK202108 covers 269.37 acres with a mixed-use plan including residential, kindergarten, urban community services, and park green spaces.

According to the announcement, the original land costs for these three parcels exceeded 2.522 billion yuan, with an market valuation of about 2.104 billion yuan. The final proposed purchase price is 1.725 billion yuan, an 18% discount from the valuation, and over 30% below the total land cost. Moving from a land cost of 2.522 billion yuan to a recovery price of 1.725 billion yuan means China Overseas will face an accounting loss of nearly 800 million yuan on these three parcels if the acquisition proceeds.

Back in 2021, when the real estate market was still booming, China Overseas made a major land acquisition in Hefei, securing four parcels in one day. The three parcels now being recovered were part of that acquisition. The direct reason for land recovery was “idleness.” Since 2021, these parcels have remained undeveloped and are officially classified as “stock idle state-owned construction land.”

Last year, over 5,500 idle land parcels planned for buyback using special bonds

Using special bonds to recover idle land is not just a simple “handing over,” but a financial strategy to leverage multiple benefits. For struggling property developers, divesting idle land that cannot be developed helps optimize their balance sheets and can bring real cash benefits.

Since the Ministry of Natural Resources issued a notice in November 2024 on using local government special bonds to recover and acquire stock idle land, this policy has been in effect for over a year. According to China Index Academy, in 2025, over 5,500 land parcels across China are planned for buyback using special bonds, totaling over 750 billion yuan.

2025 provincial and municipal plans for using special bonds to buy idle land and issuance scale

Image / China Index Academy

In terms of purchase prices, about 47% of the parcels planned for buyback have a ratio of approximately 0.8 to 1.0 compared to their transaction prices at sale; about 29% have a ratio between 0.9 and 1.0; roughly 18% have a ratio between 0.7 and 0.8, indicating some parcels are being bought back at significant discounts.

For Hefei, the three parcels planned for buyback are an important move to activate stock land, resolve real estate inventory, and ease corporate funding pressures.

China Index Academy believes that land buyback is a key tool for destocking. It is expected that more cities will continue to promote the buyback of idle land in 2026, accelerating inventory reduction, improving supply-demand relations in the real estate market, and better boosting market expectations.

Turning long-standing “burdens” into cash, China Overseas “cuts losses”

Although China Overseas faces significant losses from land recovery, it also sheds burdens and recovers funds—essentially a “stop-loss” move.

Industry insiders say that on paper, this is a money-losing deal; but from a cash flow perspective, it is a real “lifeline.” With sales still recovering and debt pressures remaining, the 1.725 billion yuan cash inflow is far more important than idle land sitting on the balance sheet.

In fact, this is not an isolated case but part of China Overseas’ recent nationwide asset disposal and strategic contraction. Besides transferring equity of subsidiaries, the company’s land projects in other cities have also been subject to land recovery by local governments.

Currently, China Overseas’ long-cherished “real estate + cultural tourism” core model is facing challenges. Previously, the company relied on real estate projects to support cultural tourism, but the real estate market adjustment has significantly impacted its revenue.

According to China Overseas’ 2025 annual performance forecast, the company expects a net loss attributable to shareholders of 13 to 15.5 billion yuan. The company states that the main reasons for the performance decline are a decrease in revenue and gross profit margin from real estate operations, and a strategic focus on “de-stocking and cash recovery” through asset transfers and other measures, which has led to some transactions incurring losses.

Looking at historical data, China Overseas has been in loss since 2022, with losses of 10.905 billion yuan in 2022, 6.492 billion yuan in 2023, and 8.662 billion yuan in 2024—totaling over 26 billion yuan in just three years.

In 2026, its sales performance is also expected to be weak. According to the company, January 2026 contract sales amounted to about 590 million yuan, a 53% year-on-year decline. Under this circumstance, activating idle assets and raising funds become necessary strategies.

The current buyback plan is under public consultation (March 3–9). If no major objections are raised, the process will proceed to implementation. The future use and pricing of these three parcels will remain a market focus.

Notably, in September last year, Wu Bingqi, Vice President of China State Construction and former President of China Resources Land, was appointed as General Manager of China Overseas Group. Now, Wu Bingqi has been promoted to Chairman and is acting as President. After the “cutting losses” move, how China Overseas stabilizes its core business and survives the industry downturn remains a tough challenge for Wu Bingqi. As the era of “land banking for profit” ends, both China Overseas and the entire industry need to learn how to find a new balance between survival and growth amid shrinking balance sheets.

Beijing News Shell Finance Reporter Yuan Xiuli

Editor Yang Juanjuan

Proofreader Mu Xiangtong

Cover photo / IC photo