Part 6/8:
As developers return land, local governments may lose significant revenue streams, exacerbating their existing fiscal challenges. The situation has become a double-edged sword; while the government may come to agreements with developers to reactivate idle land, the persistent economic challenges and ongoing declines in housing demand could hinder these efforts.
Decreasing land values and weak demand signal a shift in the real estate landscape—a landscape dominated by defaults and unsold inventories. With home prices collapsing in places like Guangzhou, developers increasingly return plots in a bid to avoid losses.