China Primary Land Development Industry Report, 2010
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According to the notice about the Promoting of Special Action on Two Rectifications & One Reform and Responsibility Assignment unveiled by Ministry of Land and Resources of the People’s Republic of China on September 10,2010, from April 2011, the primary land development in China must follow enterprise-dominant pattern instead of previous state-owned land reserve center taking charge of development. According to the data provided by Ministry of Land and Resources of the People’s Republic of China, the total amount of land-transferring fee in China reached RMB2.7 trillion in 2010, up 69.8% from a year earlier. Additionally, in 2009, the land development cost accounted for approximately 60% of the total land-transferring fee in the light of the data about expenditure details of the land-transferring fee published by Ministry of Finance of People’s Republic of China.

Total Amount of Land-Transferring Fee in China, 2006-2010 (RMB bln)
Source: Ministry of Land and Resources of PRC; ResearchInChina

Currently, the enterprise-dominant primary land development model consists of EPC (Engineering, Procurement, and Construction) mode, profit sharing mode, and linkage development pattern of primary and secondary land; wherein, EPC model is represented by Beijing. For instance, the enterprises that carry primary land development with their own funds should obtain a maximum profit at eight percent of development cost, according to the regulations issued by Beijing Municipal Government. However, such model featuring low profit margin is in fact not welcomed by property developers.

Profit-sharing is the most widely used pattern in primary land development. The income from primary land development deducting development cost will be divided into two parts for both enterprise and government, with premium ratio as usual 70% to the enterprise and 30% to the government, and sometimes 60% to 40% or half to half. What’s remarkable is that, Xiamen C&D Inc. sweeps as high as 85% of profit in primary land development projects in Xiamen city. Some enterprises apply both EPC and profit-sharing patterns as a combination in their cooperation with governments.

By applying linkage development pattern of primary and secondary land, enterprises can acquire more profits, but it requires much more investment and a longer period with higher risk than other patterns. Still, many real estate companies select this pattern. In addition to pursuing more profit, more and more secondary land developing enterprises shift their focus to primary land development due to the strict governmental control on secondary real estate market.

Modes and Investment Yields of Primary Land Development Projects of Part of Domestic Listed Companies
Source: RearchInChina

1. Overview of China Primary Land Development 
1.1 Land-transferring Fees and Expenditure
1.2 Land Market Structure 
1.3 Constitution of Land Resources  
1.4 Land Supply and Demand  
1.5 Land Prices  
1.6 Cost and Profit of Primary Land Development 

2. Drivers for Primary Land Development in China   
2.1 Economic Growth  
2.2 Urbanization  
2.3 Development of Industries and Industrial Parks
2.4 Development of Real Estate Sector
2.5 Construction of Indemnificatory Housing 

3. Business Models of Primary Land Development in China
3.1 Cost Structure and Taxes 
3.1.1 Cost Makeup
3.1.2 Taxes
3.2 Profit Model
3.2.1 Self-development of Land Reserve Institution
3.2.2 EPC 
3.2.3 Profit Sharing 
3.2.4 Land Compensation  
3.2.5 Undeveloped Land Reserve 
3.2.6 Linkage development pattern of primary and secondary land 
3.3 Flows of Primary Land Development
3.4 Laws and Regulations on Primary Land Development

4. Case Study of Primary Land Development
4.1 Announcements about Primary Land Development of Listed Companies
4.2 Project of Shenzhen Heungkong Holding Co., Ltd. (600162) in Langfang  
4.3 Project of Zhong Nan Construction Group Co., Ltd. (000961) in Danzhou  
4.4 Project of Zhong Nan Construction Group Co., Ltd. (000961) in Haimen 
4.5 Project of Black Peony (Group) Co., Ltd. (600510) in Changzhou  
4.6 Project of Sichuan Gaojin Food Co., Ltd.(002143) in Yinbin  
4.7 Project of Zhongtian Urban Development Group Co., Ltd. (000540) in Guiyang
4.8 Project of Yunnan Metropolitan Real Estate Development Co., Ltd.(600239) in Kunming
4.9 Project of Fujian Zhangzhou Development Co.,Ltd. (000753) in Zhangzhou 
4.10 Project of Xiamen C&D Inc.(600153) in Xiamen

5. Real Estate Markets in Key Cities
5.1 Beijing  
5.2 Shanghai 
5.3 Guangzhou  
5.4 Tianjin
Total Value of Land-Transferring in China, 2006-2010 
Expenditure Structure of Land-transferring Fees in China, 2009
Urban Land Market Structure in China
Constitution of Land Resources in China  
Types of Approved Land Use and Regional Distribution, 2009   
Supply and Category of State-owned Land for Construction, 2005-2009  
Supply and Demand of Land in China, 2000-2009
Performance of Land Supply Scheme in China, 2005-2009
Performance of Land Supply Scheme in Key Cities of China, 2009
Growth Rate of Integrated Land Prices in Key Cities in China since Q4 2007
Area of Land Transferring and Area of Land Transfer in the Form of Bid Invitation, Auction and Listing and Price Changes, 2005-2009
Premiums and proceeds of Land Bid Invitation, Auction and Listing in Key Cities, China, China, 2006-2009
Average Land Price Growth Rate of 35 Key Cities in China, 2001-2009
Cost of Primary Land Development in China, 2006-2010 
GDP of China, 2000-2010 
Per Capita Disposable Income of Urban Residents in China, 2000-2009
China Urbanization Rates and Targets in Past Years
Fixed Asset Investments in Secondary Industry, 2003-2010
Constitution of Land Transfer Area, 2009
Land Traded Area for Industrial Purposes in China, 2007-2009
Land Traded area in Jan.-Nov. , 2008-2010
Investment Accomplishments of Real Estate Development Enterprises, 2000-2009 
Total Commercial Housing Area under Construction and Completed Commercial Housing Value, 2000-2009
The Growth in Floor Area of Commercial Housing Sold and in Total Sales Area of Residential Buildings, 2000-2010
The Growth in Average Selling Prices of Commercial Housing Sold and Residential Buildings, 2000-2010
Investments in Residential and Affordable Housing in China, 1998-2009 
General Procedures of Primary Land Development
Primary Land Development Flow Chart in Beijing
Announcements by Part of Domestic Listed Companies on Primary Land Development Projects 
Modes and Investment Yield of Primary Land Development Projects of Part of Domestic Listed Companies 
Investment Growth in Real Estate Development in Beijing, 2007-2010 
Real Estate Construction Area and Completion Area in Beijing, 2007-2010  
Housing Sales Area and Residential Sales Area in Beijing, 2007-2010 
Investment Growth in Real Estate Development in Shanghai, 2007-2010   
Real Estate Construction Area and Completion Area in Shanghai, 2007-2010 
Housing Sales Area and Residential Sales Area in Shanghai, 2007-2010   
Housing Sales and Residential Sales in Shanghai, 2007-2009
Gross Regional Product and Growth Rate of Guangzhou, 2005-2010 
Fixed Asset Investments and Growth Rate in Guangzhou, 2005-2010 
Per Capita Disposable Income of Urban Residents in Guangzhou, 2005-2010 
Investment Growth in Real Estate Development in Guangzhou, 2006-2010 
Real Estate Construction Area and Completion Area in Guangzhou, 2005-2009  
Gross Regional Product of Tianjin, 2000-2010 
Fixed Asset Investments in Tianjin, 2007-2010 
Per Capita Disposable Income of Urban Residents in Tianjin, 2007-2010 
Population of Tianjin, 2006-2009
Statistics on Real Estate Investments in Tianjin, 2000-2009 
Real Estate Completion Area in Tianjin, 2000-2009
Trade Volume of Residential Housing in Tianjin, 2003-2009
Average Knockdown Price Trend of residential Buildings in Tianjin, 2003-2009

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