CHINA RES LAND Shenzhen Granary Stalls

Author | Zhou Zhiyu

Editor | Huang Yu

At the end of November, Shenzhen Bay. The luxury residential project Shenzhen Bay Luanxi, jointly developed by China Resources Land and China Overseas, had its first opening, attracting 13 billion yuan in a single day. The billion-yuan sky-high flats were snapped up by wealthy individuals as if they were buying cabbage, and the wave of money surging in the sales office seemed to announce that the invincible "Shenzhen No. 1" is back.

However, the frenzy for luxury homes cannot mask China Resources Land's overall decline in Shenzhen. In this once fertile ground, China Resources Land continues to lose momentum.

According to data from the China Index Academy, China Resources Land ranked seventh among real estate companies in Shenzhen with a sales revenue of 8.032 billion yuan in the first 11 months, a significant gap compared to the first place Hongrongyuan (18.255 billion), and second place China Merchants Shekou (14.396 billion).

Shenzhen Bay Luanxi, developed by China Resources Land and China Overseas, is expected to contribute over 7 billion yuan in sales to China Resources Land based on nearly 80% of the current online signing rate, but this is not enough to reclaim its throne.

From being the "Shenzhen No. 1" for three consecutive years from 2021 to 2023, leading by a wide margin, to slipping to fourth place in 2024, China Resources Land has been hovering between seventh and ninth place in the first 11 months, unable to break into the top five, falling from grace in just over a year.

Once, Shenzhen was the most important "granary" for China Resources Land, contributing nearly 20% of the group's performance; now, this proportion has shrunk to less than 5% in the first 11 months of this year.

China Resources Land's poor performance in Shenzhen is mainly due to its own engine stalling.

Over the past decade, China Resources' strategy in Shenzhen has been to focus on "super projects" in core areas (such as China Resources City) while also targeting peripheral areas.

For many years, the most sought-after properties for Shenzhen's middle class and property speculators were in China Resources City. Since the project opened in 2014, prices have surged from 47,000 yuan per square meter to 131,000 yuan per square meter. This has made every launch of China Resources City highly sought after, with the meme of "millionaires squatting in corners" constantly circulating.

This also drove the hot sales of the "Runfu" series products outside the core area. However, starting in 2023, market differentiation has led to a cold reception for China Resources' products in peripheral areas, further impacting its sales in Shenzhen.

Currently, China Resources Land is increasingly reliant on a few "super projects" in Shenzhen. Although Shenzhen Bay Luanxi is selling well, it lacks the momentum of China Resources City. This project not only has a 50% stake in cooperation with China Overseas but also faces significant pressure for future sales—most of the well-selling billion-yuan sky-high flats are nearly sold out, leaving behind the fiercely competitive "entry-level products" priced between 30 million and 50 million yuan.

A senior executive from a leading real estate company in South China believes that Luanxi's plot ratio of 7.59 far exceeds that of traditional luxury homes. The current group of buyers for the Luanxi project differs from those competing for Runxi; this group will carefully consider spending over 30 million yuan on a purely residential unit with no sea view and unclear future value With projects such as CITIC Xinyue Bay, LianTai ChaoZong Bay, and China Merchants Houhai Xi entering the market one after another, Shenzhen's luxury housing market is set to witness fierce competition.

After Shenzhen Bay Luanxi, China Resources Land's supply of "super projects" in Shenzhen has also become somewhat weak. This year, Shenzhen has sold 12 plots of land, and China Resources Land only jointly acquired one plot with China Merchants Shekou (with a 50% equity stake). The transaction floor price for this plot was 59,586 yuan/sqm, with a premium rate of 34.81%, making it the total price king in Shenzhen this year, which is likely to be developed into high-end residential properties in the future. In addition, China Resources has not made any significant acquisitions in the open market.

With a reduction in public land acquisitions, China Resources Land's substantial old renovation reserves in Shenzhen have not been effectively released.

Following the old renovation project in Nanshan Dachong Village, the HuBei old renovation project, with a total investment expected to exceed 70 billion yuan, is an important card in China Resources Land's hand.

This giant project, which began in 2011, once carried China Resources' ambition to create a "world-class urban complex," even planning a 500-meter high landmark "HuBei Tower."

At the end of November this year, the planning adjustment for the core A9 plot of HuBei changed its land use from purely commercial to "mixed commercial and residential," with the floor area ratio significantly reduced from 13.1 to 8.7. This means that some commercial dreams have been abandoned in favor of seeking quick returns through residential development. After all, the original plan was to complete the project by 2027, but so far only one plot (A4) has been delivered.

The HuBei old renovation project is also a microcosm of China Resources Land's past business model. Behind the proud positioning of "urban investment and development operator," the operational assets are indeed the second growth curve, but they also represent a huge pool of capital accumulation.

Data shows that by the end of 2022, China Resources Land's asset management scale was still at 358.6 billion yuan, and by mid-2025, this figure is expected to reach 483.5 billion yuan. In order to "lighten the load," China Resources Land is the most proactive among many leading real estate companies in promoting asset securitization, but this path is currently not smooth. Since March of this year, Huaxia China Resources Commercial REIT has frequently announced plans to include multiple projects for expansion, but the expansion has not yet been completed.

Under the immense pressure of capital accumulation, China Resources can no longer afford to wait.

At the end of October this year, Xu Rong replaced Li Xin as the chairman of China Resources Land Holdings (the core bond issuance platform). As early as 2023, this executive with a strong government background had already personally taken on the role of chairman of the HuBei old renovation project company.

The group president personally stepping in as the head of the old renovation project and managing the finances makes Xu Rong's series of responsibilities quite intriguing.

Data reveals China Resources Land's extreme thirst for capital. In November, China Resources Land broke a six-year silence by issuing $3.9 billion in bonds; three days later, it discounted and placed shares of China Resources Mixc Lifestyle to cash out 2 billion Hong Kong dollars. As of November, China Resources Land's public financing this year exceeded 60 billion yuan, setting a new high in nearly a decade.

Behind this is the soaring debt pressure on China Resources Land. By mid-2025, China Resources Land's total borrowing scale is expected to rise to 281.27 billion yuan, with the net interest-bearing debt ratio surging by 7.3 percentage points within six months. The debt due within one year amounts to 61.6 billion yuan, while the cash on hand has shrunk, decreasing by 9.8% year-on-year to 120.24 billion yuan China Resources Land also needs to maneuver funds and revitalize old renovations to survive this harsh winter.

The billion-dollar sales of Shenzhen Bay Junxi serve as a strong shot in the arm for China Resources Land. After the effect wears off, it still has to face the harsh reality.

The era of "dominating the entire city and leading with a gap" is gone forever. Balancing the profit release of core assets with the capital accumulation of massive old renovations will be a long-term issue that this state-owned enterprise must confront in Shenzhen.

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