Local Government Financing Vehicles Buy More Land to Fill Hole in Official Coffers

As cash-strapped property firms became reluctant to bid for land, local government financing vehicles (LGFVs) have stepped in to help authorities make ends meet, but questions remain over whether their purchases can boost local revenues in real terms.

LGFVs have bought more land use rights nationwide starting the third quarter when the cash crunch at some private property developers worsened, and in some places these vehicles became the major bidders. From July to Nov. 15, LGFVs bought 13.38% of land parcels by value across the country, up 4.38 percentage points from the January-to-June period, according to calculations by brokerage Zhongtai Securities Co. Ltd.