Two Departments: Newly Added Construction Land Shall Not Be Used for Commercial Real Estate Development in Principle; Annual Increase in Urban and Rural Construction Land Shall Not Exceed the Area of Revitalized Stock Land

Securities Times Reporter Zhang Da

On March 16, the Ministry of Natural Resources held a press conference to interpret the “Notice on Further Improving Natural Resource Element Guarantee” (hereinafter referred to as the “Notice”), jointly issued with the National Forestry and Grassland Administration. The “Notice” clarifies that it will coordinate the stock and incremental construction land to promote connotative development.

The “Notice” requires, firstly, to establish and improve a mechanism linking the activation of stock construction land with new construction land, with the principle that the annual new urban and rural construction land should not exceed the area of activated stock land; secondly, to prioritize the guarantee of major projects and public welfare development with new construction land, generally not used for commercial real estate development.

Kong Weidong, Director of the Department of Natural Resources Development and Utilization at the Ministry of Natural Resources, stated that urban construction land includes both newly formed land through expropriation and reallocation, as well as stock land revitalized through old city renovation, inefficient land redevelopment, and reclaiming or acquiring idle land. Both constitute sources of land for economic and social development. Coordinating stock and incremental land supply requires careful planning to make good use of every inch of land. Except for projects related to energy, transportation, and water conservancy, the annual new construction land in each region should not exceed the area of activated stock land; only by activating one acre of stock land can one acre be added. Through good coordination of stock and incremental land, we can prevent disorderly urban expansion and sprawling development, and promote a shift from relying on new land to revitalizing existing space.

Kong Weidong pointed out that China’s basic national condition is having many people and little land. The shortage of land resources is difficult to change in the short term. The allocation of land elements must account for the “three books”: market benefits, national development, and people’s livelihood and well-being. Use good steel on the blade, and prioritize the limited new land for major infrastructure projects and public welfare development. On one hand, increase land supply for key projects such as energy, transportation, and water conservancy, and ensure reasonable land use for modern industrial systems like new quality productivity; on the other hand, strengthen support for livelihood projects closely related to residents’ lives, such as urban village renovation.

Kong Weidong emphasized that land supply is an important part of the stable and healthy development of the real estate market. Based on the new situation where the supply and demand of the real estate market have undergone major changes, new construction land should generally not be used for commercial real estate development. This does not mean no land supply for real estate, but rather focusing on optimizing the use of stock resources (“precision supply and quality supply”), and implementing city-specific policies to control the pace and timing of land supply. Priority should be given to areas with advantageous location and complete supporting facilities, to promote enterprises to “secure good land and build good houses,” continuously improve urban functions, and enhance residents’ quality of life.

The China Index Academy believes that the new land management regulations directly affect the supply and demand relationship in the real estate market and will have a positive impact on stabilizing the market. It is expected that local governments will accelerate the storage of idle stock land and, through reasonable adjustments in land planning and land exchanges, adopt better solutions to meet market land needs. After the implementation of this policy, regions are likely to increase urban renewal efforts, paying more attention to the renovation of high-value land. Meanwhile, the principle that new construction land is generally not used for commercial real estate development will reduce land supply from the source, and the pace of revitalizing stock land will accelerate, which is conducive to destocking and further improving the supply-demand relationship in the real estate market, helping to stabilize it.

(Edited by: Wen Jing)