Accelerating inventory reduction: 22 provinces lower down payment ratios for commercial properties

Source: 21st Century Business Herald Author: Zhang Min

On March 16, the Shanghai Head Office of the People’s Bank of China issued a notice saying that the minimum down payment ratio for purchase loans for commercial properties (including “mixed-use properties for commercial and residential purposes”) in Shanghai has been adjusted to no less than 30%. The move is intended to accelerate de-stocking in the commercial and office property market and further boost market trading activity.

On January 15 this year, the spokesperson of the People’s Bank of China and Deputy Governor Zou Lan stated that, together with the National Financial Regulatory Administration, they would lower the minimum down payment ratio for purchase loans for commercial properties to 30% to support efforts to de-stock the commercial and office property market. Two days later, the two departments jointly issued the notice “Regarding Policy Adjustments to the Minimum Down Payment Ratio for Purchase Loans for Commercial Properties,” clarifying that the minimum down payment ratio for purchase loans for commercial properties has been adjusted to no less than 30%.

Before this, the minimum down payment ratio for purchase loans for commercial properties was 50%. In specific implementation, some banks set the ratio at 60% or even higher. Therefore, this move is seen as an important signal for de-stocking commercial properties.

According to an incomplete tally by a reporter from 21st Century Business Herald, as of now, 22 provincial-level administrative regions have lowered the minimum down payment ratio for commercial properties. Some provinces and cities have also introduced other measures to promote de-stocking in commercial real estate.

Various actions indicate that the pace of de-stocking in commercial real estate is accelerating.

De-stocking cycle longer than residential

“Commercial properties” broadly refer to properties with commercial ownership rights such as office buildings, retail shops, and so on. Unlike residential properties, the ownership term for commercial properties is typically 40 or 50 years, and their tax and fee burden is usually higher than that of residential properties.

Due to multiple factors, China’s current inventory of commercial properties is relatively large. According to data released by the National Bureau of Statistics, as of the end of February this year, the amount of commercial housing awaiting sale in China was about 800 million square meters, of which the floor area of office buildings and commercial operating properties awaiting sale was 190 million square meters, accounting for about 23.9%. In the same period, about 710 million square meters of office buildings and commercial operating properties were still under construction.

Because they face more restrictive measures than residential properties, the purchase threshold for commercial properties is relatively higher, and their de-stocking cycle is also longer than that of residential properties. Based on the average sales pace over the most recent 12 months, the de-stocking cycle for office buildings (calculated using the awaiting-sale floor area as of the end of February this year, the same below) is currently about 28 months, while the de-stocking cycle for commercial operating properties is more than 30 months.

In the same period, the de-stocking cycle for residential properties is only around 7 months.

A statistics report by commercial real estate service provider CBRE also noted that this year, the expected new supply of office buildings in 10 cities nationwide will reach 4.7 million square meters, up slightly by 7% year over year; in 2027 and 2028, it will gradually fall to 4.2 million square meters and 3.5 million square meters, respectively. For retail properties, it is expected that in the next two years, the new supply of high-quality retail properties in China’s main eight cities will be 4.39 million square meters and 3.56 million square meters, respectively, continuing to remain plentiful. The new supply area in Shanghai, Guangzhou, Hangzhou, Nanjing, and Tianjin will be higher than in the prior two years.

In recent years, calls to strengthen policy intervention and push de-stocking in commercial real estate have been不断（频繁） appearing.

During this year’s Two Sessions, National Committee member and Chairman of New Hope Group Liu Yonghao suggested optimizing the planning layout and reducing the proportion of新增 commercial land. Support reactivating existing stock commercial and office assets, optimizing the “conversion of commercial to residential” policy, and appropriately loosening restrictions on apartments in areas such as enrollment and household registration.

Liu Yonghao said that changes in population patterns and the gradual rise of online shopping have all weakened the role of offline commerce. He said that, besides taking various measures to absorb existing stock, “new planning must also take into account changes in the economic form and make some adjustments; don’t plan so much commercial space.”

Policy tailwinds released one after another

Before this adjustment to the minimum down payment ratio, policies related to de-stocking commercial real estate had already been rolled out one after another.

In September 2025, the State Council General Office issued the “Opinions on Releasing the Potential of Sports Consumption and Further Advancing High-Quality Development of the Sports Industry,” which stated that it is encouraged to legally use industrial plants, commercial properties, storage properties, and others to build sports activity spaces.

On November 28, 2025, the China Securities Regulatory Commission solicited public comments on the pilot program for commercial real estate investment trust funds. The core of this pilot is to open up the equity financing channel for commercial real estate, providing standardized financial solutions to help revitalize existing stock assets.

Since this year began, positive signals have continued to be released.

On March 5, the Ministry of Natural Resources and the National Forestry and Grassland Administration issued the “Notice on Further Improving Support for the Safeguarding of Natural Resource Elements,” clarifying that newly added construction land should prioritize major project construction and the development of people’s livelihood-related undertakings, and in principle should not be used for commercial real estate development.

The “15th Five-Year Plan (2026–2030) Outline” released this month states that it will promote category-based disposal of land that has been allocated but not developed and projects under construction, and advance the revitalization and utilization of existing commodity housing and idle commercial office properties. The “15th Five-Year Plan (2026–2030) Outline” also mentions that it will, in accordance with the law, proceed prudently with the renewal of rights to use industrial and commercial land.

Analysts generally believe that this not only means adjustments on the supply side, but also that the revitalization and utilization of idle commercial properties is expected to accelerate.

At the level of local governments, many cities have recently also introduced multiple supporting policies to drive de-stocking in the commercial and office property market.

For example, Shanghai allows business complexes to be compatible with functions such as commercial hotels, R&D and innovation, culture and sports, medical services, education and training, and rental housing (including talent apartments). Hangzhou issued policies related to reform of industrial and commercial land, clarifying a reform-and-improvement mechanism for efficiently revitalizing existing spaces, and allowing temporary changes in the use of buildings.

For subsidies, Wuhan provides a 50% subsidy based on the actual paid amount of deed tax for purchasing newly built commercial and office properties. Nanning provides a 10k yuan home purchase subsidy for purchasing commercial and office projects exceeding 100 square meters.

The China Index Academy indicated that exploring pathways to revitalize idle commercial and office properties will be an important policy focus this year, and it expects more attempts in different regions.

Regarding the substantial reduction in the minimum down payment ratio, the institution said that in the short term it will help ease inventory pressure for commercial and office properties and improve developers’ cash flow; in the medium to long term, it provides financial support for revitalizing existing stock assets.

However, the China Index Academy also pointed out that this is not a signal of a comprehensive market reversal. Compared with residential mortgages, commercial property loans still have clear differences in terms of loan-to-value amount, interest rates, and loan terms. In addition, on the execution side, banks will prudently determine the specific down payment ratio in light of factors such as the customer’s risk profile. More importantly, the transaction activity level of commercial real estate fundamentally depends on the overall health of the real economy. To truly “unlock” “silent assets,” market participants’ confidence and the vitality of the real economy must return in sync.

(Editor: Wen Jing)

Keywords:

                                                            commercial properties
                                                            down payment