Goldman Sachs economists project a 30% drop in land sale revenues due to new regulations forcing developers to sell only completed homes. This shift dismantles a funding mechanism that has supported the sector and local governments for decades.
Presales and mortgage disbursements historically provided roughly 40% of developers' construction capital. Consequently, the new mandate is expected to reduce developers' near-term investment capacity by approximately 40%.
The rules, introduced between August 29-31, follow a period of decline since 2021. In the first seven months of 2026, land sales revenue fell 30.8% year-on-year, while nationwide property development investment decreased by 19.2%.
In 2025, presales represented approximately 68% of all new-home transactions. The market reaction was immediate: the CSI 300 Real Estate Index dropped 4.7%, and the index for Hong Kong-listed developers fell 6.2%.
Analysts expect the regulations to accelerate consolidation in the industry. State-backed firms with stronger balance sheets and cheaper financing are positioned to gain market share as smaller private developers struggle with solvency.