China is beginning to tackle a long-running problem threatening parts of its commercial property market: the expiry of land leases underpinning office towers, shopping malls and warehouses across the country.
The issue has become increasingly significant as scores of properties approach the point at which their remaining land tenure falls below the thresholds preferred by investors and lenders. More than one trillion yuan (S$190 billion) of non-residential property now has leases of 20 years or less, according to Andrew Chan, head of valuation and advisory services for Greater China at Cushman and Wakefield.
Under China’s land system, almost all urban land is owned by the state. Rules introduced around the early 1990s generally provided leases of 40 years for shopping malls, 50 years for industrial and office properties and 70 years for residential buildings. Yet there has been limited clarity over how commercial and industrial leases would be renewed when they expire, creating uncertainty for owners and prospective buyers.
That uncertainty has weighed on a property sector already struggling through a slump lasting more than five years. Office values in some major cities have fallen by more than 40 per cent from their peaks, while developers across the market have defaulted on about US$130 billion (S$166.5 billion) of debt.
“Policy uncertainty over leasehold renewal has tanked appraisal values of commercial properties, hurt fundraising and impeded deals,” said Song Hongwei, research director at Tospur Real Estate Consulting. “Now, they’re all set to be improved.”
The scale of the problem is expected to increase. By 2030, around 30 million sq m of office and retail space in 18 major Chinese cities will have less than 20 years remaining on their land tenures, according to an earlier estimate by CBRE Group. The figure covers only properties with single owners and therefore may understate the total exposure.
The shortening leases are already affecting transactions. Local insurers and developers generally require land terms to extend beyond two decades before entering deals, according to Jones Lang LaSalle. Many banks will not extend or refinance loans secured against properties with less than 10 years remaining, according to Chan, raising concerns that the issue could become more systemic if unresolved.
Developers including Parkview Group and New World Development have struggled to sell assets partly because buyers remain uncertain about future lease extensions. Parkview has been seeking to sell a Beijing shopping centre affected by short land tenure, including a parcel with less than a decade remaining. The company has also explored offering buyers a partial stake in Parkview Green.
New World is facing a similar issue with an office tower in Shanghai built above its Shanghai K11 Art Mall. Potential buyers are reluctant to pay higher prices without greater certainty over future land rights.
The uncertainty has also drawn the attention of major international property investors. Executives at Singapore’s CapitaLand Group have raised concerns with senior Chinese officials, while CapitaLand Investment manages or owns stakes in more than two million square metres of real estate with remaining tenures of 20 years or less. Brookfield Asset Management has also discussed land tenures and possible extensions with local officials.
Authorities in Shanghai have recently circulated guidelines setting out terms and costs for lease renewals, following a similar move in Guangzhou earlier in 2026. Both cities have proposed lease costs of at least 70 per cent of a relevant benchmark, potentially payable over more than a year. The benchmark is based on land prices before accounting for the added value of buildings constructed on the sites.
Other areas, including Xiamen and a district of Hangzhou, have issued similar rules for industrial land, although with less detail.
Investors, however, remain concerned about how applications for extensions can be made years before leases expire and how local authorities will determine eligibility. Lillian Duan, who leads the real estate practice at Chinese law firm Kaiman Legal, said local governments retain wide discretion.
China’s central government said earlier in 2026 that it would “refine laws and regulations governing the renewal of land-use rights for industrial and commercial purposes and advance extension work in a steady and lawful manner”. For investors, the crucial question now is whether local experiments in cities such as Shanghai and Guangzhou will eventually become a nationwide framework.
“You have to have a central rule to apply across China,” Duan said.
