The real estate sector has received a long-awaited significant boost with the release of the urban renewal roadmap for the next five years. On the evening of May 28, following review and approval by the State Council executive meeting, the "Urban Renewal '15th Five-Year' Plan" (hereinafter referred to as the "Plan") was officially announced. It outlines the goals, key tasks, major projects, and policy measures for China's urban renewal work during the "15th Five-Year" period.
The Plan specifies quantitative targets to be achieved during the "15th Five-Year" period, including the renovation of 500,000 units of dilapidated urban housing, approximately 115,000 old residential communities, about 1,500 old neighborhoods and factory areas, and 4,000 urban villages. On the morning of May 29, real estate companies saw a surge in the secondary market. In the A-share market, China Vanke Co., Ltd. (000002.SZ) hit a limit-up, while Xiangjiang Holding Group Co., Ltd. (600162.SH) and Beijing North Star Company Limited (601588.SH) gained over 10%. In the Hong Kong stock market, Country Garden Holdings Company Limited (2007.HK) saw its intraday stock price surge over 38%, Sunac China Holdings Limited (1918.HK) rose over 21%, with China Vanke Co., Ltd. (2202.HK) and Shimao Group Holdings Limited (0813.HK) also following the upward trend.
As the first "15th Five-Year" plan for urban renewal, it places greater emphasis on principled and holistic planning, fully integrating forward-looking development concepts, sustainable development mechanisms, and systematic implementation models for urban renewal. It is noted that the Plan, for the first time at the national level, proposes quantitative development targets for the renewal and renovation of residential, industrial, and public spaces, indicating that future urban renewal will be more comprehensive and systematic.
**Accelerating the Transformation of Real Estate Enterprises** The past two years have seen several important policies in the field of urban renewal. Notably, in May last year, the General Office of the CPC Central Committee and the General Office of the State Council issued the "Opinions on Continuously Promoting Urban Renewal Actions" (hereinafter referred to as the "Opinions"), which marked the first release of the "roadmap" for implementing urban renewal actions. Building upon the "Opinions," the Plan further sets development goals for 2030 and 2025. The aim is to achieve significant progress in urban renewal actions by 2030, with initial results in transforming urban development and construction methods. By 2035, the urban renewal institutional mechanisms should be more robust, with notable achievements in urban structure optimization, kinetic energy transformation, quality improvement, green transition, cultural continuity, and governance efficiency. The goal is to basically build modern people's cities that are innovative, livable, beautiful, resilient, civilized, and smart.
For the urban renewal tasks to be completed by 2030, the Plan outlines 10 main indicators. Among them, the target for renovating dilapidated urban housing is set at 500,000 units by 2030, doubling from the 250,000 units during the "14th Five-Year" period. The number of newly started renovations for old urban residential communities has decreased from 240,000 during the "14th Five-Year" period to 115,000. The number of urban village renovations remains largely consistent with the "14th Five-Year" period, staying at around 4,000, indicating that the scale of renovation remains substantial.
The Plan also mentions real estate-related content, requiring the acceleration of building a new model for real estate development, improving basic systems for commercial housing development, financing, and sales, and promoting the transformational development of real estate development enterprises and their participation in urban renewal. It is noted that the "Opinions" only mentioned enterprises once, stating "support enterprises in revitalizing idle and inefficient stock assets." In contrast, the current wording is significantly more positive towards real estate enterprises.
From a real estate perspective, this plan clarifies three aspects highly relevant to the industry: stronger support for revitalizing stock land, establishing a full-lifecycle safety management system for buildings, and explicitly defining the construction and renovation work for "good houses." There is an urgent need to increase efforts in revitalizing stock land, and "stronger support" implies further policy inclination, with continuous follow-up from financial and fiscal policies. Overall, real estate should become an important component of urban renewal, focusing not only on the revitalization and renewal of buildings and land but also on continuously gaining policy support.
**Promoting Consumption and Expanding Domestic Demand** As one of the important measures to expand domestic demand, the role of urban renewal in promoting economic development has been a key policy focus in recent years. The Central Urban Work Conference held in July last year outlined seven key tasks. The second task, "building vibrant innovative cities," is related to innovation and high-quality development and explicitly mentions "carrying out urban renewal with high quality."
The Plan also places "cultivating and strengthening new driving forces for urban development" in a prominent position as the second item after the overall requirements, emphasizing the careful cultivation of an innovation ecosystem within urban renewal. This includes promoting the transformation and upgrading of old neighborhoods, factory areas, inefficient industrial parks, and inefficient buildings; optimizing and upgrading traditional industries; cultivating and strengthening emerging and future industries; developing new quality productive forces according to local conditions to enhance urban industrial innovation vitality; developing intelligent construction and cultivating a modern construction industry chain; promoting the renovation and upgrading of consumer infrastructure; developing first-launch economy, silver economy, ice and snow economy, low-altitude economy, event economy, and experience economy; and cultivating international consumption center cities.
In recent years, whether it's the renovation of inefficient industrial parks or the construction of innovative neighborhoods, an increasing number of projects aim to build industrial chains, creating an ecosystem where "upstairs and downstairs are upstream and downstream." For example, Beijing E-Town's "Modular World" brings together AI application companies like Jisi Technology, large model R&D enterprises like Sanqi Wanwu, and data computing power companies like Kaiwang Data.
"Cultivating and strengthening new driving forces for urban development" involves both the revitalization and utilization of existing properties and the transformation and upgrading of old neighborhoods, factory areas, inefficient industrial parks, and inefficient buildings to develop new industries, alongside the new real estate model and housing security. Real estate and construction have been pillar industries of the national economy for many years. Under the new situation where significant changes have occurred in the supply and demand relationship of the real estate market, their value must be presented through new models, stock-driven approaches, integration with the real economy, and models that promote human development.
**Central Financial Support** "Where does the money come from?" is a key issue in urban renewal. The Plan explicitly states that urban renewal will be supported through fiscal and financial policies, with active efforts to attract social capital participation. On the fiscal side, this includes support from central budget investments, central financial support for implementing urban renewal actions, and allowing qualified urban renewal projects to be supported through local government special bonds. Local governments are required to increase financial input and implement relevant tax and fee reduction policies for urban renewal.
Since 2024, central finance has supported urban renewal actions for three consecutive years, benefiting 50 cities in total. Among them, 15 cities received support in 2024, 20 in 2025, and 15 in 2026. The subsidy amounts are up to 8 billion yuan per city in eastern regions, up to 10 billion yuan in central regions, and up to 12 billion yuan in western regions.
On the financial side, under the premise of not adding new local government implicit debt, market-oriented models such as comprehensive development, syndicated loans, and project investment are allowed to support projects with controllable risks, commercial sustainability, and meeting qualification requirements. Furthermore, exploring financial support for the independent renewal and original demolition and reconstruction of old urban housing is encouraged. "Exploring financial support for the renewal and original demolition and reconstruction of old urban housing" is noteworthy, indicating the cultivation of new housing financial support methods beyond traditional personal housing loans. It is understood that several projects, such as Zhegong New Village in Hangzhou and Building 8, Huapichang Hutong in Beijing, have already been explored and practiced.
Regarding social capital, efforts will be made to promote the issuance of Real Estate Investment Trusts (REITs) in the infrastructure sector and asset securitization products for qualified urban renewal projects. Qualified urban renewal enterprises will be supported in issuing corporate bonds and medium-term notes. Following the principle of "who benefits, who pays," the market mechanism will be fully utilized to establish a reasonable cost-sharing mechanism among the government, market, and residents.
The release of the Plan signifies that cities have entered an era dominated by stock, and urban renewal has officially become a new driving force for urban growth in China's new period. Urban renewal must be advanced in a high-quality and sustainable manner. High quality means no longer relying on large-scale demolition and construction or being real estate-led, but rather being people-city-led. Through renewal, existing spaces can be better revitalized, supporting facilities can be improved, living environments can be significantly enhanced, economic formats can become more diverse, cultural heritage can be effectively protected, and distinctive features can be more prominently displayed. Ultimately, this transforms urban development and construction methods from incremental to stock-based and from investment-led to a combination of investment and consumption.
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