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%.
“The high-cost land projects acquired before 2021 have not yet been fully cleared, which is the main factor behind the current decline in profit margins,” admitted a financial executive from a real estate company. “However, we are seeing signs of recovery in the profitability of high-quality projects.”
After discussions with management teams from several real estate companies, Securities Daily reporters learned that the core logic of profit recovery lies in shifting from “scale expansion” to “product supremacy.” Among these, “quality housing” is the breakthrough for real estate companies to navigate the cycle.
In June 2023, Ni Hong, Minister of Housing and Urban-Rural Development, first introduced the concept of “quality housing.” Subsequently, cities like Beijing and Shanghai advanced projects for “quality housing.” In 2025, “quality housing” was included in the Government Work Report for the first time. On March 31, the Ministry of Housing and Urban-Rural Development released the national standard Residential Project Specifications, which proposed “hard indicators” such as a minimum floor height of 3 meters for residential units and mandatory elevators for buildings with four or more floors. These standards will officially take effect in May.
The introduction of relevant policies has accelerated the real estate industry’s entry into an “era of quality.” Many real estate companies have rushed into the “quality housing” track and resumed land acquisitions. Management teams from several leading real estate companies revealed that the gross profit margins of newly developed high-quality projects have recovered to over 20%, with net profit margins returning to double-digit levels. Almost all these new projects meet the aforementioned “quality housing” standards.
The underlying market logic is a shift from “competing on land prices and scale” to “competing on products and location,” with “product strength” becoming the decisive factor affecting profitability. Faced with this change, real estate companies are accelerating efforts to shed low-profit-margin projects and concentrate resources on “quality housing” that is more popular in the market.
For example, Greentown China Holdings Limited (“Greentown China”) cleared 42.2 billion yuan of difficult inventory in 2024, exceeding its target by 113%.
“The company achieved this through strategies like ‘revitalizing old projects’ and bulk transactions, ultimately surpassing the annual target,” said Geng Zhongqiang, Executive President of Greentown China.
Li Jun, Vice President of Greentown China, told Securities Daily that in 2024, nine of the company’s projects were fully sold out during their initial launch phases. Greentown China is repairing profitability by enhancing the premium capabilities of high-end projects.
In response to new regulations and market changes, a group of leading real estate companies is also accelerating strategic deployments for “quality housing.” “2025 is a critical year for the industry to accelerate the construction of a new development model and implement ‘quality housing.’ The company will proactively meet challenges, strengthen research on ‘quality housing’ standards, and actively take on projects,” said Lin Zhaoyuan, Chairman of Yuexiu Property, in an interview with Securities Daily.
Yu Xiangxin, Deputy General Manager of China Overseas Technology, further envisioned “quality housing”: “In the future, everything in delivered homes should be smart.”
“Under the ‘product-driven’ logic, the real estate industry is moving from extensive expansion to refined operations,” said Yan Yuejin, Deputy Director of the Shanghai E-House Real Estate Research Institute, in an interview with Securities Daily. “The competitive landscape of the industry is changing.”
Diversified Businesses to Boost Cash Flow
Beyond the core development business, an increasing number of real estate companies are exploring more resilient growth paths to enhance their ability to withstand market cyclical fluctuations. Diversified businesses such as property services, commercial operations, long-term rental apartments, and construction contracting are accelerating their development, gradually becoming the “second growth curve” supporting long-term sustainable development.
In 2024, the recurring business profit of China Resources Land Limited (“China Resources Land”) exceeded 10 billion yuan for the first time, accounting for 40.7% of total profit, highlighting the significant contribution of operational income to corporate profits. Longfor Group Holdings Limited (“Longfor Group”) adopted this strategy earlier, with operational profits exceeding 50% of total profits in 2023. Chen Xuping, Chairman and CEO of Longfor Group, stated that by 2028, the company’s operational income is expected to continue rising, accounting for over half of total revenue.
Unlike the previous asset-heavy model, the current diversified businesses pursued by real estate companies emphasize asset-light models to continuously improve ROE and overcome financial bottlenecks. At the same time, these businesses are integrated with capital market tools like REITs, forming a closed-loop professional division of labor for “investment, financing, management, and exit.”
In the commercial real estate sector, asset-light expansion has become an important growth model. The management of China Resources Mixc Lifestyle Services Limited stated during an earnings call that the company signed 12 new asset-light commercial projects in 2024 and plans to expand over 10 asset-light management projects in 2025.
Similarly, leveraging the advantages of asset-light operations, construction contracting has become an effective way to improve corporate ROE. In 2024, Greentown Management Holdings Limited, Greentown China’s construction contracting subsidiary, achieved revenue of 3.441 billion yuan and a gross profit of 1.706 billion yuan. Compared to self-owned development projects, the contracting model allows companies to avoid high land costs while earning substantial profits with controlled risks.
Additionally, with the continuous expansion of the REITs market, many real estate companies are actively leveraging REITs and asset securitization to unlock the value of existing assets. For instance, China Resources Land has established dual platforms with China Resources Commercial Asset REIT and Huaxia Fund China Resources Youku REIT. According to plans, China Resources Land aims to achieve REITs issuance scale of over 50 billion yuan in the next five years.
“Large-scale asset management is an important business model and the company’s second growth curve,” said Zhang Dawei, Senior Vice President of China Resources Land. “In the future, the company will continue to promote the cycle of assets and capital, enhance operational efficiency and cash flow generation, and achieve comprehensive leadership in both scale and efficiency in large-scale asset management.”
Through diversified businesses, real estate companies’ cash flows continue to grow. In 2024, China Merchants Shekou Industrial Zone Holdings Co., Ltd. (“China Merchants Shekou”) generated net cash flow from operating activities of 31.96 billion yuan, the highest since 2019.
Liu Shui, Director of Enterprise Research at the China Index Academy, told Securities Daily that in the coming years, the proportion of operational business income for some typical real estate companies will further increase, with profit contributions expected to reach 50%.
Reducing Interest-Bearing Debt to “Lighten the Load”
Whether upgrading the core development business or expanding diversified operations, higher demands are placed on the financial health of real estate companies. Currently, reducing interest-bearing debt and enhancing solvency have become key to navigating the cycle and solidifying fundamentals.
From annual report data, positive changes are emerging in industry balance sheets. Data from the China Index Academy shows that in 2024, the average asset-liability ratio (excluding advance receipts) of the top 100 companies was 65.3%, a decline for the fourth consecutive year since 69.5% in 2021. This reflects the results of multiple measures, including companies proactively “hitting the brakes,” scaling back high-risk projects, and accelerating debt repayment.
“In 2024, China Merchants Shekou adopted a more conservative financial management strategy to navigate the industry cycle with a safer asset-liability structure,” said Yu Zhiliang, CFO and Board Secretary of China Merchants Shekou.
Similar to China Merchants Shekou, many leading real estate companies have made “debt reduction” a bottom-line strategy, controlling scale expansion while optimizing debt structures toward “low-cost, long-cycle, and local-currency” directions.
This trend is supported by policy measures that have opened new financing channels for real estate companies.
On January 24, 2024, the People’s Bank of China and the National Financial Regulatory Administration jointly issued the Notice on the Management of Operating Property Loans, explicitly stating that before the end of 2024, for well-regulated and promising real estate development enterprises, national commercial banks could issue operating property loans to repay existing real estate-related loans and publicly traded bonds of the developers and their group holding companies (including consolidated subsidiaries), in addition to meeting operational funding needs related to the properties themselves or refinancing loans and shareholder advances used to acquire properties. In September 2024, the People’s Bank of China announced an extension of the operating property loan policy until the end of 2026.
Driven by these policies, some listed real estate companies have gained significant room for debt restructuring and financing channel expansion, ensuring inflows of financing cash flow.
“The company is replacing some short-term credit bonds with long-term operating property loans and plans to increase the scale of property loans to around 90 billion yuan by the end of 2025, completing the debt structure transition within the next two to three years,” said Chen Xuping.
“In March this year, the company used an operating property mortgage loan to refinance the CMBS of Kaisa Center, with a financing cost of only 2.85%, significantly reducing financial expenses,” said Qiao Xiaojie, CFO of China Jinmao Holdings Group Limited (“China Jinmao”).
As debt risks in the real estate sector are gradually resolved, the industry is accelerating its recovery from the downturn and moving toward a more stable development trajectory. As Tao Tianhai, Chairman of China Jinmao, stated: “After digesting existing problems, structural demand in the domestic real estate market will remain strong, and the industry will still have great potential. The competitive landscape will inevitably mature through adjustments.”