Chinese state-owned firms are acquiring foreclosed real-estate projects, signaling that long-promised government moves to absorb vast housing oversupply in the crisis-stricken property sector are beginning to gain traction—albeit gradually.
Analysts say the involvement of state firms may cushion the pace of further home price falls and ease the drag that the property slump has had on China’s economic growth since 2021.
But they say it could also prolong the process of the housing market finding a bottom as distressed assets change hands at a deep discounts instead of being fully written off.
China’s ministry of housing and urban-rural development, the State-owned Assets Supervision and Administration Commission and the State Council Information Office, which answers media queries on behalf of the cabinet, did not respond to requests for comment.
Some State Firms Buy At Hefty Discounts
A review of listings on Alibaba’s auction platform shows a small share of foreclosed property tenders over the past year have been acquired by state-owned firms, often at steep discounts of 19%–43%, including unfinished projects.
Analysts say the purchases remain limited but mark an early step in tackling China’s vast housing overhang, estimated at roughly 3,000 sq km. Deals span cities such as Hainan and Guangzhou, with some units earmarked for affordable housing.
The acquisitions align with a 2024 policy encouraging state firms to absorb distressed inventory, though uptake has been gradual amid financial risks and market uncertainty.
China’s Property Crisis Could Be ‘Generational’
State-firm purchases may partly offset weak private demand and relieve price pressures, but analysts note many tenders attract only a single state bidder, suggesting limited market appetite even at discounted rates and pointing to a prolonged asset write-down process.
Broader foreclosure data underscores the strain: only 169,000 of 719,000 auctioned properties sold in 2025, down about 4% from 2024, at an average 26% discount, according to the China Index Academy.
Analysts warn the severe oversupply could prolong China’s real-estate crisis for decades, drawing comparisons with Japan’s slow property downturn in the 1990s. Unlike sharper corrections in the U.S. and Europe, China has avoided large-scale debt write-offs, leaving developer liabilities on financial institutions’ books and extending sectoral stress.
(With inputs from Reuters)
