BEIJING and Guangdong Province have become the first localities in China to resume sales of land reserve special bonds, the proceeds of which are used to buy up unused land, after a five-year hiatus amid ongoing efforts to revive the country’s real estate market.

Guangdong plans to issue two seven-year bonds with a total value of 30.7 billion yuan (US$4.2 billion), its finance department announced plans Sunday.

The funds raised will finance 86 land reserve projects across 19 cities in the southern province, including repurchases of land previously bought by property developers who have been unable to start construction work. Repayment of these notes will mainly come from land sale revenues.

Beijing, the nation’s capital city, launched a 46.3-billion-yuan special bond package Feb. 18, with about 11.7 billion yuan allocated to 25 land reserve projects.

China first introduced land reserve special bonds in 2017 as a pilot program to fund land acquisition and pre-development efforts by local governments. The initiative was halted in 2019 to redirect special bond funding toward infrastructure projects.

Last November, the Ministry of Natural Resources announced the reintroduction of land reserve special bonds to support localities in buying back idle building land.

The decision was aimed at balancing supply and demand, improving liquidity for local authorities and developers, and easing the property market downturn.

Based on historical patterns, this year’s sales of land reserve bonds is estimated to reach 1 trillion yuan, about 30% of the annual new special bond quota, potentially funding the acquisition of 100 million to 200 million square meters of land, according to a research report by Sealand Securities.(SD-Agencies)