Amid a nationwide slump in both transaction volume and prices in China’s judicial auction housing market, which has added pressure to the broader property sector, some local state-owned enterprises (SOEs) have begun entering auction platforms to acquire real estate assets in bulk at deeply discounted prices.
Industry insiders say these moves are driven not only by the chance to acquire high-quality assets at low cost during the downturn, but also by efforts to take over distressed properties and ease pressure on local markets.
Recently, 88 residential units from Phase 4 of the Yitao Yayuan project in Guangzhou’s Nansha district were listed on Alibaba’s judicial auction platform.
All of the units are brand-new, unfinished residences originally held by the developer. They entered the judicial auction process after Ping An Bank’s Guangzhou branch applied for enforcement against the developer, Guangzhou Nansha Economic and Technological Development Zone Yitao Yayuan Real Estate Co., Ltd.
Information from the corporate registry platform Tianyancha shows that the major shareholder behind Yitao Yayuan Real Estate is Yango Shanghai Real Estate Co., Ltd., a subsidiary of the now-defaulted developer Yango Group. While it has become common in recent years for distressed developers’ remaining properties to be sold through judicial auctions, the outcome of the Phase 4 Yitao Yayuan auction was notable: all 88 units were sold in the first round, generating total proceeds of 80.41 million yuan.
Of the 88 units, only a small portion were purchased by individual buyers, while more than 60 were acquired by a single buyer—Guangzhou Nansha Urban Operation Co., Ltd. The company is a state-owned enterprise jointly held by Guangzhou Nansha Development and Construction Group Co., Ltd., with a roughly 75% stake, and Guangzhou Nansha Modern Agriculture Industry Group Co., Ltd., which holds about 25%. Ultimate ownership can be traced to the Guangzhou Nansha Economic and Technological Development Zone Management Committee and the Guangdong Provincial Department of Finance.
Industry insiders viewed the auction as a clear “bargain.” The transaction unit price for the properties acquired by Guangzhou Nansha Urban Operation Co., Ltd. ranged from 6,657 yuan/sqm to 7,629 yuan/sqm, whereas listings on the Beike platform show current second-hand prices for Yitao Yayuan generally between 10,000 yuan/sqm and 30,000 yuan/sqm.
Some industry observers suggest that the large-scale acquisition of residential units by SOEs may not be intended for direct market resale, but is more likely to be used for affordable housing, talent housing, or resettlement in urban renewal projects.
Similar situations have occurred in other cities. In late September 2025, 37 units in Building 2 of Zhonghai International Center in Haikou, Hainan Province, were publicly auctioned by the executing court. The total building area was approximately 15,000 square meters, with a starting price of 139 million yuan. The units were ultimately acquired at the starting price by Huzhou Chanfeng Enterprise Management Partnership (Limited Partnership), equivalent to a unit price of 9,286 yuan/sqm.
Tianyancha shows that the bidding party was established in September 2025, with its major shareholder being Huzhou Chanti Commercial Management Co., Ltd., which is controlled by Huzhou City Industrial Investment Development Group Co., Ltd., under the supervision of the Huzhou State-owned Assets Supervision and Administration Commission.
By comparison, the filing average price for Building 1 of Zhonghai International Center was as high as 33,000 yuan/sqm, while the judicial auction price was only about one-third of that.
The phenomenon of SOEs “scooping up” judicial auction properties is taking place in a clearly cooling market. In 2025, the national judicial auction housing market experienced a trend of declining volume and prices, putting continuous pressure on the broader real estate sector.
At a recent public event, Meng Xiaosu, founder of the China Real Estate Index System and former head of the National Housing Reform Project Team, noted that when low-priced judicial auction transactions occur in a community, these prices often quickly become new valuation benchmarks, lowering price expectations for the entire community and creating a negative feedback loop of “judicial auction → falling housing prices → more judicial auctions.”
According to the China Index Academy, in 2025, the national judicial auction market listed a total of 719,000 properties, down 6.6% year-on-year; 169,000 properties were sold, down 4.4% year-on-year; and the total transaction value reached 253.62 billion yuan, down 23.6% year-on-year. The annual average transaction price was 4,653 yuan/sqm, down 12.7% year-on-year, with an average discount rate of 74.1%, indicating that buyers generally purchased assets at around 74% of their appraised value.
Against this backdrop, some SOEs have stepped in, likely motivated by multiple factors.
“Judicial auction property prices are significantly lower than market prices, offering state-owned capital an opportunity to acquire quality assets at low cost. Additionally, during the real estate deleveraging and risk-clearing process, local SOEs play a ‘stabilizer’ role by taking over problematic assets to help ease local market downturn pressures,” said a post-investment management professional from a large state-owned real estate investment company.
The professional added that, overall, the SOEs’ “scooping up” of judicial auction properties is both a temporary phase in the real estate risk-clearing process and an active measure by local governments to stabilize the market and mitigate risk. The ultimate impact on the market will depend on how these assets are managed—for example, whether they are used as affordable or talent housing, or later released onto the market in bulk. Different approaches will produce different effects.