Urban villages are a unique form of residence that gradually emerged during the urbanization process, typically formed when original villages are surrounded by city expansion. These areas are primarily made up of self-built houses, and their infrastructure is relatively underdeveloped. However, the low rent makes them particularly attractive to migrant workers and low-income groups.
In recent years, the renovation of urban villages has become a hot topic in China’s urban governance and development. By promoting the intensive use of land, improving living conditions, and enhancing urban functions, the transformation of urban villages can not only optimize the urban structure but also promote economic development and social stability.
This issue of Urban Innovation in China focuses on the renovation of urban villages in Guangzhou, showcasing the opportunities, challenges, and innovative practices involved in this process.
At the entrance of the Yaotai Village Economic Association in Kuangquan Street, Yuexiu District, Guangzhou, a notice regarding land acquisition compensation has been posted. The notice states: “The purpose of this land acquisition is for the first phase of the Yaotai Village renovation project. The comprehensive land price for farmland in Yuexiu District’ s is 510,000 RMB per mu, with 255,000 RMB per mu for land compensation fee and another 255,000 RMB per mu for resettlement subsidies.”Next to the notice board, a sign for the Urban Renewal Office of Guangzhou Yaotai Industrial Co., Ltd. has also been put up.
In October this year, the Ministry of Housing and Urban-Rural Development of the People’s Republic of China announced plans to carry out the renovation projects of 1 million village-in-city units and dilapidated housing, using measures such as monetized resettlement. In November, policies supporting village-in-city renewal—including special bonds and loans—had expanded from 35 major cities to nearly 300 cities at or above the prefecture level. These policy shifts have reignited interest in urban village redevelopment, a sector that had previously stalled.
According to incomplete statistics from the reporter of Southern Finance Omnimedia, since October, cities such as Beijing, Tianjin, Qingdao, Guangzhou, Guiyang, Dalian, Chongqing, and Nanning have successively launched village-in-city renovation projects. Cities like Taiyuan and Lanzhou have also issued project tender announcements, including several major projects valued at over 10 billion RMB.
One example is the Yaotai Village renovation project, which spans a planned construction area of 2.75 million square meters in the center of Guangzhou and is expected to generate over 60 billion RMB in total investment. As one of China’s early adopters of urban renewal initiatives, Guangzhou has identified 52 village-in-city projects this year under a new model of legal land acquisition and net land transfer. Of these, 34 projects have already broken ground, with construction starting on 42,000 resettlement homes.
Across various cities, the model of government-led initiatives, state-owned enterprise execution, and special funding support has become the key approach for this large-scale village-in-city renovation.
Experts interviewed emphasized that village-in-city renewal is a pressing necessity for urban development. However, renovation projects generally take a long time, and most of them are still in the stage of land acquisition and demolition, with significant challenges in transitioning to the phase of development, requiring continuous support from policies to facilitate. While redevelopment accelerates, it has to take the importance of preserving the supplementary economic and social functions that villages in cities have traditionally provided into consideration.
“No impact on rentals for now, as the renovation will take 8 to 10 years to complete,” said Ms. He, a landlord in Sanyuanli Village, Baiyun District, in response to a reporter posing as a tenant. The Sanyuanli Village renovation project has just begun, and handwritten rental advertisements can still be seen plastered along the narrow alleyways between closely packed buildings. For the villagers, tenants, governments, and corporations involved, this decades-long redevelopment has just begun.
As part of the Sanyuanli project, Phase II of the demolition and redevelopment of Xingfa Plaza is already underway | Photo by Zheng Wei
Multi-City Announcements of Billion-RMB Renovation Projects
Over the past two months, a series of policies aimed at accelerating village-in-city renewal has been introduced, including the renovation projects of 1 million village-in-city units through monetized resettlement, acquisition of the stock of idle land, and housing stock. The scope of policy support for village-in-city redevelopment has also expanded to nearly 300 cities at the prefecture level and above, sending strong signals to expedite these projects.
Policy momentum has spurred cities across the country into action. According to incomplete statistics from the reporter of Southern Finance Omnimedia, since October, cities such as Beijing, Tianjin, Qingdao, Guangzhou, Guiyang, Dalian, Chongqing, and Nanning have all announced the launch of village-in-city renovation projects. Meanwhile, cities like Taiyuan and Lanzhou have issued project tender announcements for redevelopment projects, many of which involve investments exceeding 10 billion RMB.
For instance, in November, Beijing’s Fengtai District announced the launch of its seven village-in-city renovation projects, with a total investment of approximately 91.1 billion RMB. These projects span 707.59 hectares and involve the renovation of 6,345 households and approximately 18,000 residents. The total building area to be demolished is around 2.97 million square meters, rendering Fengtai to take the lead in both project numbers and investment amounts among Beijing’s districts. Meanwhile, in Beijing’s central Chaoyang District, Wang Siying Village and Guanyintang Village in Wang Siying Township completed the vacation of 921 homesteads, achieving an overall signing rate of 99.78%.
In Tianjin, a city next to the capital, 13 out of 19 village-in-city renovation projects had begun construction by the end of the third quarter. Of the remaining six projects, three involve resettlement through the purchase of housing stock, while the other three are set to commence by year-end. The city is expected to achieve a total investment of 7.396 billion RMB in 2024. Additionally, all 17 projects requiring special loans have been included in the first batch of the nationally supported project list, with a total loan amount of 21.58 billion RMB.
Further south, by late October, the Xinan and Dongnanzhuang village-in-city renovation projects in Qingdao’s West Coast New Area—both listed under China’s 2024 national village-in-city renovation plan—had entered the construction phase, achieving the success of signing agreements, clearing land, and commencing work within the same year. Covering a total area of approximately 109 mu with a planned building area of 250,000 square meters, the projects have a total investment of 2.4 billion RMB. Earlier this year, this project successfully secured a special loan of 1.5 billion RMB from the China Development Bank. Completion and resident relocation are expected by 2027.
For 2024, Qingdao has set a target to renovate 138 villages and deliver 40,000 housing units. By mid-November, construction on 27 villages, comprising 25,000 units, had topped out, while seven villages, with 4,300 households, had completed resident relocation. In terms of implementation, Qingdao is accelerating project development under a government-led approach that adheres to the model of demolishing within the year, rebuilding within the year, and relocating within three years. The city has also secured approximately 82 billion RMB in special loans and central government funding. Additionally, Qingdao is pioneering a housing voucher resettlement model, which has already facilitated the resettlement of 2,230 households, covering 205,500 square meters.
Overall, the keywords driving this large-scale village-in-city renovation across China are government-led initiatives, state-owned enterprise execution, and special funding support. Among the primary funding sources for many renovation projects are local government special bonds, loans from policy-based financial institutions, and commercial bank loans.
A representative of a key enterprise involved in a Guangzhou village-in-city renovation project told the reporter from Southern Finance Omnimedia that special loans currently account for a significant proportion of project funding, with enterprises also allocating a portion of their own capital, while larger infrastructure projects may apply for support through special bonds and central government budgetary investments.
In early 2024, Guangzhou became one of the first cities nationwide to secure special loans for city-in-village renovations, with policy banks granting credit at 142.6 billion RMB, and the first batch of loans, amounting to 1.5 billion RMB, was disbursed. By August 2024, 56 renovation projects across Guangzhou had been included in the special loan credit list.
Also, at the beginning of the year, the Guangzhou Village-in-City Renovation Special Plan (2021–2035) was released, outlining a target to redevelop 272 villages in cities (administrative villages) involving 289 projects by 2035. For 2024, the renovation focuses on advancing four key areas: the Guangzhou New Central Axis (Haizhu), Guangzhou Railway Station, Luochongwei, and the Huanwushan Innovation Zone.
By the end of November, 34 of Guangzhou’s 52 village-in-city renovation projects, which are being implemented under the new model of legal land acquisition and net land transfer had begun construction. These projects have initiated the building of 42,000 resettlement units, with the remaining 18 projects preparing to start by the end of 2024. Upon completion of all 52 projects, approximately 108,000 households are expected to benefit from the redevelopment.
Guangzhou in Focus: How is the New Model Being Implemented?
In April, Guangzhou’s Huangpu District issued the country’s first housing voucher for village-in-city renovation. In May, the Guangzhou Village-in-City Renovation Regulations, the nation’s first local legislation dedicated to village-in-city redevelopment, officially came into effect. By November, the first special loan in Guangdong for acquiring existing housing stock to be used as resettlement units was secured in Guangzhou. As one of China’s first megacities to embark on urban renewal, Guangzhou has achieved several national “firsts” this year while cities across the country actively advance village-in-city renovation.
In Guangzhou’s village-in-city redevelopment projects, the city is shifting away from traditional models such as government land acquisition, self-led redevelopment, and cooperative efforts. Instead, it is transitioning to a new model of legal land acquisition and net land transfer. The Guangzhou New Central Axis (Haizhu), Guangzhou Railway Station, Luochongwei, and the Huanwushan Innovation Zone have been identified as pilot zones for this approach.
Why the shift? According to Ma Xiangming, President of the Guangzhou Territorial Spatial Planning Association, the primary challenge in village-in-city redevelopment is not planning but land. Traditional models rely on private sector involvement supported by favorable policies to drive redevelopment. However, this approach has revealed shortcomings: residential projects with great market prospects progress quickly, while industrial, poorly located projects that are difficult to rebuild often face delays.
“This is often described as eating the meat and leaving the bones,” Ma explains. To address these challenges, recent redevelopment efforts have adopted a model of government-led initiatives, specialized funding, and corporate involvement instead of being led mainly by the market. This approach leverages specialized funding to tackle projects that the market alone cannot manage, effectively taking on the tough bones of redevelopment.
One notable example is the Yaotai village-in-city redevelopment project, launched in September within the integrated city-industry-residence zone near Guangzhou Railway Station. It is the first project in Yuexiu District to adopt the model of legal land acquisition and net land transfer.
The Yaotai village-in-city redevelopment project in Guangzhou’s Yuexiu District has officially begun its foundation pit supporting construction | Photo by Zheng Wei
According to the relevant person in charge from the Kuangquan Street Office, the project covers Yaotai Village, Wang Shengtang Village, and Sha Yongnan Village through a demolition and reconstruction approach, spanning 97 hectares with an existing building area of 2.02 million square meters and a planned total construction area of 2.75 million square meters. The redevelopment will be carried out in phases according to the principle of divided areas and phased progress, with three major clusters set to be developed progressively. Once completed, the project is expected to add around 1 million square meters of premium industrial space, develop 7 community centers, and introduce 180,000 square meters of public service facilities. The total investment in the project is projected to exceed 60 billion RMB.
According to the South Finance Omnimedia reporter on site, the main contractor for the Yaotai village-in-city redevelopment is Guangzhou Municipal Construction Group, which is currently conducting housing demolition and construction activities. The project has already obtained permits for foundation pit support and earth excavation works, officially kicking off the foundation pit supporting construction.
As one of the first approved city-level village-in-city redevelopment projects, Guangzhou Municipal Construction Group is leading 7 renovation projects, including the Yaotai, Xinjie-Daling, Tangkeng, Lujing, and Guanglong Village redevelopment projects. Publicly available information shows that Guangzhou has designated 7 state-owned enterprises as the main developers for city-level projects, including Guangzhou Urban Investment Group, Guangzhou Municipal Construction Group, Yue Xiu Group, Pearl River Enterprises, Guangzhou Airport Authority, Guangzhou Communications Investment Group, and Guangzhou Metro.
Deng Haozhi, a real estate economist and member of the Expert Committee of the Guangzhou Real Estate Trade Association, states that the net land transfer model is beneficial to both the government and the market. On the one hand, net land can be sold at a higher price, and if it can be properly handled, it is undoubtedly a positive move for the fiscal revenue. On the other hand, for developers, this model shifts the risks associated with demolition and redevelopment to the government, reducing uncertainties tied to village-in-city redevelopment projects.
Since April, when Guangzhou’s Huangpu District issued the nation’s first housing voucher for village-in-city redevelopment, this form of resettlement has become increasingly popular across various regions.
Deng noted that, for homebuyers, Guangzhou’s housing voucher policy is particularly appealing as it includes both basic compensation and a policy incentive of up to 5%. Furthermore, the housing resource now extends to all new commercial housing available for sale across Guangzhou. For the government, housing voucher resettlement eliminates the need for substantial one-time cash payouts during the settlement process. It also stimulates the new house market, helping alleviate inventory pressures in the real estate sector.
How to Preserve the “Patch” Role of Villages in Cities During Renovation?
As village-in-city redevelopment projects accelerate across China, the unique roles these areas play in urban development are gaining recognition. Balancing rapid urban village reconstruction to mitigate public health risks while retaining and optimizing their functions has become a critical challenge in large-scale redevelopment efforts.
According to Ma Xiangming, during the past decades of rapid urban growth, villages in cities have dual characteristics. On one hand, they often face issues such as poor environmental conditions, insufficient municipal infrastructure, and vulnerability to flooding. On the other hand, scattered throughout cities, these areas serve as temporary refuges for young people, incubate emerging industries, and fill gaps in public services by acting as informal “patches” for the formal urban space.
Ma noted that in the past, due to limited government investment in low-rent housing, the real estate supply primarily relied on the market, thus villages in cities providing affordable housing in city centers, addressing challenges like high land costs, premium amenities, and soaring property prices, compensating for market gaps.
Taking Guangzhou’s Yuexiu and Baiyun Districts as an example, a reporter from Southern Finance Omnimedia learned during his visit that in Sanyuanli Village in Baiyun District, a two-bedroom apartment of around 50 square meters rents for approximately 1,500 RMB per month, equipped with air conditioning and basic furnishings. Similar units in Yuexiu’s Yaotai Village are available for around 1,300 RMB per month. If two people share the rental, the monthly rent per person is approximately 700 RMB.
Besides, Ma also highlighted the functional flexibility of village-in-city land, which gives them an advantage in fostering emerging industries compared with urban formal spaces. “A single building in a village in city can have offices on the lower floors and residences above, seamlessly integrating work and living space, which is prohibited in formal urban spaces, but the flexibility of the land usage compensates for limitations of urban functions.”
Ma emphasized the need for inclusive redevelopment mechanisms that preserve and optimize the supplemental roles villages in cities play in the urban economy during the renovation process. Renovation is not only about demolition. Village-in-city redevelopment requires a deepened and meticulous understanding of both their negative impacts and underappreciated contributions, focusing on enhancing spatial quality, upgrading industrial structures, and optimizing these aspects through a systematic approach.
(Reported by Zheng Wei, Edited by Chen Jie, Translated by Zhang Shenyan, Proofread by Dai Jiajun )
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