Tianfeng Securities Co.,Ltd. released a research report stating that although property developers' sales have not yet reversed their downward trend, the pace of decline has narrowed compared to 2024. Leading developers may further expand their market share advantages through continuous new project launches. Looking ahead to 2026, the sector may still face constraints from weak fundamentals and a lack of long-term growth narratives. However, its characteristics of low valuation, defensive positioning with low institutional holdings, and high sensitivity to policy changes remain intact. With continued adjustments to overly pessimistic fundamental expectations, the sector could offer substantial safety margins and recovery potential. The firm maintains an optimistic outlook on structural trading opportunities in the sector.
Key views from Tianfeng Securities:
**Policy**: Anchored on High-Quality Development with Targeted Measures The 15th Five-Year Plan has outlined high-quality development goals for the real estate sector, with policy focus gradually shifting from short-term risk management to long-term healthy growth. Addressing challenges such as aging demographics, risk prevention remains crucial. In 2026, traditional policy tools may see further reduction, while measures will likely emphasize stabilizing the market and aligning with high-quality development objectives.
**Industry**: Stabilizing Fundamentals, "Quality Housing" Reshaping Market Dynamics Declining housing prices have led to a contraction in household wealth perception, compounded by uncertain income expectations, which may sustain defensive consumer sentiment through 2025. The persistent gap between rental yields and mortgage rates could further reinforce buyer hesitation. The "quality housing" concept presents new growth opportunities, potentially driving shifts in development logic, competitive dynamics, and value chain restructuring.
**Companies**: Widening Divergence, Top Developers Gaining an Edge While sales across developers continue to decline, the slowdown has moderated compared to 2024. Leading firms benefit from sustained new project pipelines and increasing market concentration. Signs of thawing USD bond markets and accelerated debt restructuring indicate gradual recovery in risk appetite and financing conditions—transitioning from survival to revival. Before a systemic inflection point, many leading players may leverage brand strength, operational efficiency, and strategic land reserves to achieve earnings recovery ahead of peers.
**Valuation**: Defensive and Speculative Appeal, Structural Opportunities Favored In 2026, the sector may still grapple with weak fundamentals and limited long-term growth catalysts. Nonetheless, its low valuation, defensive appeal, and high policy sensitivity continue to offer trading opportunities. As overly pessimistic expectations adjust further, the sector could present attractive safety margins and upside potential, warranting optimism toward selective trading prospects.
**Risk Factors**: Sales recovery falling short of expectations; delayed or insufficient policy implementation; steeper-than-expected price declines.
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