July-August is the traditional off-season for the real estate market, with transaction volumes experiencing a seasonal decline. According to real estate market data released by the National Bureau of Statistics on August 15, from January to July, the sales area of newly built commercial housing nationwide was 516 million square meters, a year-on-year decrease of 4.0%. The decline in new construction starts continued to narrow at a low level, while the decline in investment slightly expanded. In July, among the 70 large and medium-sized cities, the month-on-month sales prices of commercial residential buildings in cities of all tiers declined, and the year-on-year declines generally narrowed.

Industry analysts believe that the market is still in a phase of deep adjustment. However, land auctions for prime plots in core cities have maintained relatively high activity, and the launch of high-quality projects is expected to continue supporting the market. In the second half of the year, core cities are likely to maintain resilience thanks to policy improvements and strong fundamentals.

In the first half of the year, nearly 30 of the top 100 real estate companies achieved year-on-year growth in sales performance. Among them, China Energy Engineering City Development saw its sales increase by 166% year-on-year, while Xiamen C&D and China Railway Group posted growth of over 30%. China Jinmao and Kingkey Group recorded approximately 20% growth, Huafa Properties and Sino-Ocean Group saw increases of more than 10%, and Yuexiu Property, Xiamen C&D Real Estate, and Xiangyu Group achieved growth close to 10%.

Liu Shui, Director of Corporate Research at the China Index Academy, analyzed in a WeChat message to a reporter from National Business Daily that real estate companies still face significant sales pressure in the second half of the year. However, if policymakers provide stronger support, the decline in sales may improve.

Sales Pressure Remains High in the Second Half
Data from the China Index Academy shows that in the first half of the year, the total sales of the top 100 real estate companies amounted to 1.83641 trillion yuan, a year-on-year decline of 11.8%, with the drop widening by 1 percentage point compared to January-May. In June alone, sales of the top 100 developers fell by 18.5% year-on-year, with the decline expanding by 1.2 percentage points from May.

According to CRIC data, in June, the top 100 developers achieved sales of 338.96 billion yuan, up 14.7% month-on-month. In the first half of the year, their cumulative sales reached 1.65268 trillion yuan.

Currently, local governments are actively using local government special bonds (hereinafter referred to as “special bonds”), for the real estate sector to inventory, stabilize the market to provide financial support.

The reporter noted that around the issuance of local government special bonds for the recovery and acquisition of the stock of idle land work to promote the speed is accelerating. May 23, Sichuan Provincial Department of Finance issued “on the issuance of 2025 Sichuan Provincial Government Special Bonds (seventeen to twenty-four) notice of relevant matters,” making clear that this batch of special bonds will be issued on May 30th.

In the “2025 Sichuan Provincial Government Special Bonds (Seventeenth to Twenty-fourth) Project List” (hereinafter referred to as the “Project List”), it includes more than 40 projects of recovering and acquiring the stock of unused land in Chengdu, Zigong, Yibin, Luzhou and other places, which involves an amount of more than 5 billion yuan.

“Currently, Sichuan, Guangdong, Hunan, Fujian and other provinces have issued special bonds for the recovery and acquisition of stock of idle land.” Chen Wenjing, director of policy research at the China Index Research Institute, said that the above provinces are all pilot areas for special bonds “self-examination and self-issuance”. It is expected that other regions that have announced their intention to resume the acquisition of land will refer to the practice of the provinces that have issued special bonds to speed up the pace of debt issuance and promote the recovery and acquisition of the stock of unused land to implement the work.

In order to recover the acquisition of the stock of idle land work to provide financial support at the same time, the scope of application of special bonds has been expanded to the acquisition of the stock of commercial housing work.

On May 1st, the “Residential Project Standards” will officially come into effect. This means that requirements such as “residential floor height no less than 3 meters,” “elevators installed in residential buildings with four or more floors,” and “each residential unit having rooms meeting daylight standards” will become mandatory criteria and entry thresholds for newly constructed housing.

Cities and regions across the country, including Beijing, Shanghai, Shenzhen, Guangdong, Chengdu, and Hangzhou, have already introduced relevant policies. These policies aim to enhance the quality of new homes by improving standards for aging-friendly and green energy efficiency, reducing areas counted as shared spaces to increase usable floor area, increasing floor height, expanding balcony area ratios, and measuring the dimensions of interior spaces in fully furnished homes, among other dimensions.

With the central and local governments intensively rolling out multiple high-quality housing construction standards, how can the implementation of “good housing” be tailored to local conditions? How will the introduction of “good housing” affect the pricing and market sales of new homes?

The real estate industry has entered a critical phase of “halting declines and stabilizing,” but pressures remain, requiring intensified efforts to consolidate current achievements. Currently, the disclosure of financial reports by listed real estate companies is nearing its end. Subtle changes in the “three financial statements”—balance sheets, income statements, and cash flow statements—of listed real estate companies in 2024 reveal that the industry is striving to transform its development model, repair profits, and optimize balance sheets.

So, how are listed real estate companies proactively adjusting their development strategies to explore a transformation path toward “high-quality development”? Which new businesses are emerging? What challenges remain to be addressed? Recently, with these questions in mind, Securities Daily reporters engaged in discussions with industry associations, analysts, and management teams from over a dozen real estate and property management companies, aiming to gain frontline insights into the development strategies of listed real estate companies.

Focusing on “Quality Housing” to Compete with Products

Overall, the real estate industry remains in a phase of deep adjustment. Data from the China Index Academy shows that in 2024, the average operating revenue of the top 100 real estate companies was 33.82 billion yuan, a year-on-year decline of 9.4%, while the average net profit was only 420 million yuan. Wind data reveals that in 2024, the gross profit margin of development and sales businesses for many leading real estate companies had fallen below 10%, a significant drop from the normal level of around 25%.

In recent times, the land market has been quiet for many years, the core of the first and second tier cities ushered in a long time “king tide”, the price of the land king, the premium rate of the stage record has been refreshed time and time again, vaguely revealing the real estate market stabilized signals.

Land market partial warming, on the one hand, means that the previous package of real estate incremental policies began to show results, real estate enterprises land confidence and market expectations are recovering; on the other hand, the local government took the initiative to adjust the land supply strategy, focusing on the launch of the core area of high-quality plots of land, and the release of the price limit, the floor area ratio and other multiple restrictions, stimulating the leading real estate enterprises to fill the warehouse willingness.

But the partial warming of the market does not mean a substantial reversal of the land market. Since 2021, the national land premium revenue reached a high point of 8.7 trillion yuan, and since then, the national land sales have declined sharply for three consecutive years, and by 2024, the land premium revenue fell to 4.87 trillion yuan. In particular, some second-tier cities and most third- and fourth-tier cities will face the pressure of digesting stock for several years to come, as the commercial housing market is saturated or even oversupplied due to the previous oversupply of residential and commercial land. Last year, the Ministry of Natural Resources issued a notice requesting a moratorium on the sale of new commercial residential land for cities with high inventory pressure and a depolymerization cycle of more than 36 months, further exacerbating the pressure on land finances.

Let all the people have a place to live

Ni Hong, Minister of Housing and Urban-Rural Development, said that since the 18th National Congress of the Communist Party of China, new achievements have been made in the high-quality development of housing and urban-rural construction, and positive contributions have been made to promoting Chinese-style modernization.

“In terms of housing and real estate, we continue to optimize real estate policies, improve the housing security system, and strive to ensure that all people have a place to live.” Ni Hong said that by the end of 2023, the per capita residential construction area in China’s cities and towns will exceed 40 square meters; A total of more than 64 million units of various types of affordable housing and shantytown resettlement housing have been built, and more than 150 million people have fulfilled their dreams of living in peace.

In terms of urban work, we will solidly promote urban renewal actions, transform old urban communities, accelerate urban infrastructure construction, and strive to promote high-quality urban development. By the end of 2023, the built-up area of cities across the country will reach 64,000 square kilometers, the urbanization rate of permanent residents will reach 66.16%, and more than 930 million people will live in cities and towns. The urban functions have been continuously improved, and the urban living environment has been continuously improved. More than 250,000 old urban communities have been renovated, benefiting more than 44 million households and about 110 million people.

In terms of the development of the construction industry, we will deepen the reform of the construction industry, promote the transformation and upgrading of the industrialization, digitalization and greening of the construction industry, and strive to contribute to economic development and improvement of people’s livelihood. In 2023, the total output value of the construction industry will reach 31.6 trillion yuan, the added value will reach 8.6 trillion yuan, accounting for 6.8% of GDP, and more than 50 million people will be employed.

Promote the healthy development of the real estate market

The situation in the real estate market is in the spotlight. Ni Hong said that at present, the relationship between supply and demand in the real estate market has undergone major changes, and the market is still in a period of adjustment. From the perspective of China’s urbanization development process and the people’s new expectations for good houses, the real estate market still has great potential and space. It is necessary to strengthen confidence, implement policies according to the city, pay close attention to implementation, and promote the steady and healthy development of the real estate market.

Accelerating the construction of a new model of real estate development is a fundamental strategy to prevent and resolve real estate risks and achieve high-quality real estate development. Ni Hong said that the construction of a new model of real estate development can be summarized into four aspects: first, in terms of concept, deeply understand the positioning of “houses are for living, not for speculation”, and build a good house that meets the new expectations of the people. Second, in terms of the system, the government should mainly meet the demand for rigid housing, and the market should mainly meet the demand for diversified and improved housing. Third, in terms of system, reform and improve the real estate development, transaction and use system, and lay a solid institutional foundation for the transformation and development of real estate. Fourth, in the allocation of factors, establish a new mechanism for the linkage of “people, housing, land and money”.

Dong Jianguo, Vice Minister of the Ministry of Housing and Urban-Rural Development, said that the Ministry of Housing and Urban-Rural Development will work closely with relevant departments to further strengthen the top-level design while summarizing the relevant pilot practices in the previous paragraph, firmly grasp the basic point of letting the people live in peace, accelerate the reform and improve the basic systems such as commercial housing sales and land, finance, finance and taxation, and promote institutional innovation with reform, new model construction with reform, and industrial development with reform, and strive to promote high-quality real estate development.

At present, China is increasing the construction and supply of affordable housing. The Ministry of Housing and Urban-Rural Development and relevant departments have strengthened overall planning, guided all localities to focus on the construction of allotment-type affordable housing, and accelerated the resolution of housing difficulties for wage and salary groups; We should focus on the supply of rent-based affordable housing, and solve the housing problems of new citizens, young people and other groups in a diversified way such as “one bed, one room, and one suite”. In the first seven months of this year, 2.35 million units (rooms) of affordable housing and resettlement housing in urban villages have been started and raised nationwide, with an investment of more than 440 billion yuan.

China’s real estate market is large in scale and involves a wide range of areas, which has a systemic impact on macroeconomic operation. At present, the relationship between supply and demand in the real estate market has undergone major changes, and the market is in the process of adjustment. We need to persist in seeking progress while maintaining stability, establishing first and then breaking through, use reform methods to solve problems in the process of progress, accelerate the transformation of new and old development momentum, and provide diversified and strong driving force support for high-quality development. The focus should be on three aspects.

First, we must promote the steady and healthy development of the real estate market. Recently, there have been positive changes in the real estate market. We must adhere to the combination of digesting the stock and optimizing the increment, further implement and improve the new real estate policy, do a good job in ensuring the delivery of housing, and revitalize the stock of commercial housing and land resources. In the next step, it is necessary to implement the spirit of the Third Plenary Session of the 20th Central Committee of the Communist Party of China, accelerate the construction of a new model of real estate development, eliminate the disadvantages of the past model of “high debt, high turnover and high leverage”, build a “good house” that meets the new expectations of the people, better meet the demand for rigid and improved housing, and establish basic systems such as financing, finance and taxation, land and sales. It should be pointed out that China’s new urbanization is still advancing, and there is still considerable room for high-quality development of real estate.

Second, we must accelerate the development of emerging industries and future industries, and cultivate and expand new economic growth engines. In recent years, China has formed a number of advantageous industries such as high-end equipment, new energy vehicles, and photovoltaics, and emerging industries such as a new generation of information technology, new materials, low-altitude economy, and new energy storage have developed well, and more than 140,000 specialized, special and new small and medium-sized enterprises have been cultivated. In accordance with the deployment made in the “Decision” of the Third Plenary Session of the CPC Central Committee, we should develop new quality productive forces according to local conditions, vigorously cultivate and expand emerging industries, lay out and build future industries, transform and upgrade traditional industries, promote the high-end, intelligent and green development of the manufacturing industry, form a number of emerging pillar industries, and continuously enhance the development of new momentum and new advantages.

Third, it is necessary to expand domestic demand, especially consumer demand, and enhance the endogenous power and reliability of the domestic cycle. In the face of the new international environment, we must stabilize the basic market of foreign trade and foreign investment, and constantly expand China’s development space. At the same time, it is necessary to fully tap the potential of domestic demand, make full use of the advantages of the domestic super-large-scale market, give full play to the basic role of consumption and the key role of investment, and promote China’s economy to achieve effective qualitative improvement and reasonable quantitative growth. China’s economy is a large economy, with great potential for domestic demand and internal circulation, as long as we do our own things well, we can ensure that the national economy is circulating smoothly and steadily.

The National Bureau of Statistics released semi-annual data on China’s economy, and it should be said that the economy as a whole is still tending to continue to recover. The economic growth for the first half of the year was 5 percent, which was basically within the overall target. However, the data was lower than market expectations, and downward pressure on the entire economy remains.

The market usually says that China’s economic operation is “insufficient effective demand”, I think we have to find out the source of this “insufficient effective demand” mainly in what places, in which areas there is greater pressure, and in which aspects may perform well? For example, in the data released this time, the production investment data of the manufacturing industry are good, and the growth rate of manufacturing investment has reached 9.5%, and it has been for some time. In terms of fixed investment, the investment in fixed assets in the first half of the year was 245391 billion yuan, a year-on-year increase of 3.9%, and if real estate investment is deducted, the growth rate of fixed asset investment should reach 8.5%, which is also very good.

The current real estate market has seen a continuous deep adjustment. It should be said that real estate is of obvious importance to the entire Chinese economy. For example, there was a “456” reference before, that is, 40% of the current bank loans are in the real estate sector, 50% of the income of local governments is related to real estate, and more than 60% of the property owned by residents themselves is real estate. Real estate has a profound impact on people’s investment, consumption, finance, employment, income, and even financial management and capital markets. In the first half of the year, the real estate downturn dragged down the growth rate of investment by 4 percentage points, the growth rate of social zero by 4.7 percentage points, and the growth rate of nominal GDP by 1.5 percentage points.

From the perspective of consumption, we can also see the impact of the downward trend in real estate, because buying a house itself is a consumption behavior, and a house is the largest durable consumer product. If this consumption behavior is realized, then there will be a series of derivative consumption, such as home decoration and furniture, household appliances, textiles and clothing, etc., which is very different from other situations where consumption ends at one time. There is also financial data, and the weak performance of development loans and mortgage loans in credit has a lot to do with real estate.

Nowadays, many relevant policies have been introduced for investment and consumption. The central government has issued ultra-long-term special treasury bonds, as well as local government special bonds, all of which have produced certain results, and the next step may not be small. At the same time, it is accompanied by a large number of projects, so I don’t think there is much of a problem in promoting the growth rate of infrastructure construction investment to a relatively high level.

However, we should also pay attention to the effects that can be produced after the investment of these resources, and we need to pay special attention to grasp the key points and key points, and judge which areas are weak. The central authorities have also been mentioning the policy of taking measures against the weak links in economic operation. Therefore, from the perspective of the importance and pressure of real estate, the future policy focus and resource focus should be on real estate, and there should be a series of more vigorous and targeted measures to promote the operation of the short-term market to gradually stabilize. If it can promote the stabilization of real estate and a moderate recovery to a certain extent, then it should be said to be a more important and positive signal for the operation of the entire economy.

Since the beginning of this year, the policy measures in real estate have been not small, and a number of batches have been launched last year and the year before last, and the intensity after May this year is relatively greater. Recently, from the perspective of the market situation, the sales situation has seen some phased improvement. There is an opinion that “the market has a small pulse”, and although it does not last long, I think the market is not without demand. In the last three or four years, sales have shrunk sharply, and the volume of transactions has not been well released; And after a long period of accumulation, demand always needs to be released.

According to data released by the China Index Research Institute, a total of 17 M&A transactions were carried out in the real estate industry in June 2024, an increase of 2 from May. Among them, 15 transactions disclosed transaction amounts, with a total transaction size of about 16.93 billion yuan, an increase of 11.5% month-on-month, and an average single transaction size of 1.13 billion yuan, a decrease of 10.8% month-on-month. In terms of the number and scale of M&A transactions, the popularity of M&A activities continued to increase in June.

From the perspective of transaction targets, the M&A transactions in the real estate industry in June 2024 include real estate development, commercial office and cultural tourism hotel projects. Among them, in terms of residential development, real estate enterprises mainly participate in project development through the acquisition of equity to explore key urban markets. For example, China Jinmao acquired a 51% stake in a project in Nanjing under Shoukai Co., Ltd. through a capital increase, and the two will jointly develop it.

The China Index Research Institute told reporters that this capital increase will lay the foundation for China Jinmao to obtain high-quality land resource reserves in Nanjing, which is conducive to enhancing its market share and brand influence in Nanjing.