Daowu Securities: Policy-Driven Stock Activation, Rising Importance of Urban Renewal

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Wu Securities has released a research report stating that this round of policies further emphasize the policy direction of “strict control of new additions and activation of existing stock,” clarifying that new construction land and existing land should be linked for revitalization, increasing the importance of activating existing land. From an industry perspective, the significance of existing development models such as urban renewal, shantytown redevelopment, and inefficient land redevelopment is expected to further increase. Real estate companies with experience in old city renovation, deep roots in core cities, and reserves of existing project resources may have a competitive advantage.

Wu Securities’ main points are as follows:

Event

Recently, the Ministry of Natural Resources and the National Forestry and Grassland Administration jointly issued the “Notice on Further Improving Natural Resource Element Guarantee,” which proposes 13 measures focusing on natural resource element guarantees for key construction projects in the 14th Five-Year Plan, involving coordinated land use indicators, optimized land expropriation processes, activation of existing land, and urban renewal land security.

Provincial-level overall planning and control, restrictions on activation of existing land

The notice clarifies that for provinces (districts, cities) connected via “one map” network, a total control mechanism for construction land scale during the planning period will be implemented, with provincial governments coordinating the use of the “14th Five-Year” new construction land indicators. A mechanism linking new construction land with the activation of existing land will be established and improved, with annual new urban and rural construction land generally not exceeding the area of activated existing land. The bank believes that this move further strengthens total volume constraints at the institutional level, helping optimize land resource structure. The supply of new real estate development land may tighten, increasing reliance on the reuse of existing land and urban renewal.

Continued promotion of existing land activation, accelerating connotative development

Construction land that has been legally approved by local governments but not yet used can have its approval revoked by the original approving authority, with related balance indicators still valid. Priority will be given to major projects and public welfare development when supplying new construction land, generally not for commercial real estate development. According to data from the China Index Academy, by the end of February 2026, the total amount of idle existing land targeted for acquisition via special bonds nationwide exceeds 770 billion yuan, with actual issuance surpassing 335 billion yuan. The bank believes that under the restricted new land supply, future land acquisition modes will gradually shift from traditional auction and listing expansion to models such as urban renewal, old city renovation, and redevelopment of low-efficiency land.

Optimizing expropriation procedures, urban renewal is expected to accelerate

The land expropriation approval process has been further optimized. For large-scale development involving land expropriation, separate land expropriation plans are no longer required. For scattered lands involved in shantytown redevelopment, such as corner plots, sandwich plots, and infill lands, as well as land related to affordable housing and other social welfare projects, new land approval and supply can be handled. The bank believes this can shorten expropriation and approval cycles, reduce project costs, and improve land integration efficiency. For real estate companies, this helps accelerate shantytown renovation and urban renewal projects, increasing development efficiency and stabilizing returns on existing land.

Risk warning: Policy effects may fall short of expectations; sales and receivables may underperform; industry liquidity risks may intensify.