According to a research report from Daiwa, CRIC has released forecasts for the top 100 property developers' contracted sales data for May 2026 and the first five months. The data indicates that contracted sales for the domestic property sector in May maintained a steady momentum. The contracted sales area and value for the top 100 developers fell by 10% and 2% year-on-year respectively. These figures represent a further narrowing from the declines of 15% and 12% seen in April.
On a month-on-month basis, contracted sales area and value increased by 9% and 15% respectively in May. Compared to the 3% growth for both metrics in the same period last year, this suggests the improvement is not solely driven by seasonal factors but also indicates a genuine recovery in underlying demand.
Furthermore, the average selling price in May rose significantly by 9% year-on-year and increased 6% month-on-month to RMB 22,842 per square meter. This reflects a greater contribution from first-tier cities and high-end projects, leading to an improvement in the sales mix.
Although the cumulative contracted sales value and area for the first five months are still down 17% and 21% year-on-year, the firm expects the pace of decline to slow further in the second quarter.
The report notes that the performance gap between leading developers and laggards widened further in May.
Benefiting from strong sales performance in first-tier cities, leading state-owned developers generally recorded double-digit year-on-year growth in contracted sales for May. Among them, CHINA RES LAND (01109) saw a 28% increase, while CHINA OVERSEAS (00688) posted a 14% rise.
According to data from CREIS, these state-owned enterprises saw their sales in first-tier cities grow by 9% to 134% year-on-year, with Shenzhen experiencing a particularly sharp increase of 180% to 1,523%. The firm believes the relaxation of purchase restrictions in Shenzhen at the end of April was a key catalyst.
In contrast, private developers continued to underperform. Even companies focused on Hangzhou, such as GREENTOWN CHINA (03900), recorded sales declines. Other surviving private developers like SEAZEN (01030) saw their May sales plunge by 48%, primarily due to limited new projects and insufficient presence in first-tier markets.
Daiwa stated that as share prices in the domestic property sector have corrected by more than 10% from their May peak, its stance on the sector has turned more positive. This shift is supported by May sales data, which confirms the prediction of a bottoming recovery in first-tier cities.
The firm reiterates its preference for leading state-owned developers with substantial business exposure in first-tier cities and maintains a cautious stance towards private developers, which face the risk of rating downgrades as sales momentum fades.
The firm's top picks for the sector remain CHINA RES LAND and CHINA OVERSEAS, both of which maintain a "Buy" rating.
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