GF SEC released a research report stating that for 2026 investment in the real estate sector, it anticipates absolute return opportunities in the development segment at the expected market bottom, with values of light-asset and commercial core assets set for continuous recovery. In 2025, A-share real estate stocks underperformed the broader market by over 25 percentage points, while Hong Kong-listed developers similarly lagged behind the market index. Hong Kong local enterprises and property management companies performed in line with the market in 2025. The report suggests that, unlike the alpha divergence seen in the development sector in 2025, market beta will take precedence over individual stock alpha in 2026. Furthermore, there is a high probability of a policy adjustment window opening within the year, presenting absolute return opportunities for mainstream developers. Leading property management and commercial enterprises also possess underestimated long-term value, offering greater allocation appeal in a weak policy environment. GF Securities' primary views are as follows:
Supply and Demand Summary: Total Demand Has Support, but Real Estate Assets Lack Appeal. The estimated total transaction area for new and existing residential homes for the full year 2025 is around 1.33 billion square meters. The central level of total demand is roughly equivalent to that of the first three quarters of 2024, indicating strong support for residential housing transaction volumes in the 1.2-1.3 billion square meter range. The rate of decline in new home sales has narrowed compared to 2024, and the sell-through rate has improved driven by the "Good Houses" policy. The growth rate of existing home transaction volume has slowed compared to 2024, with current transaction volumes for new and existing homes being largely comparable. Prices continue to face significant pressure, showing a trend of stabilization in the first half of 2025 followed by a renewed decline in the second half. Declines exceeded 10% across all city tiers, although cities and segments with higher rent-to-price ratios and relatively healthy supply-demand dynamics demonstrated some price resilience. Currently, the home purchase burden rate for residents has fallen to 48%. However, the annualized net asset return for purchases made with a 20% down payment over the past four years was -62%. In a buyer's market, stabilizing price expectations is a crucial prerequisite for overall market stabilization.
Risk Prevention as the Bottom Line; Necessity for Policy Introduction in 2026 Gradually Increases. The overall macro-policy tone for 2026 continues the successful experience of 2025. Year-end statements regarding real estate were quite clear: "preventing risks" is the bottom line, and stabilizing the real estate market remains the primary work objective. The sector faces severe challenges in 2026, including the expansion of negative homeowner equity, the economic drag from real estate, pressure from the decline of land finance as fiscal maneuvering room shrinks, and the potential re-emergence of corporate credit issues. These factors注定 (determine) that the policy environment in 2026 will not be calm, and the intensity of policy guidance may gradually increase. New home transactions, land acquisitions, and construction starts are relatively sensitive to changes in the market environment and are expected to see a narrowing of declines or even turn positive year-on-year. However, investment, completions, and construction-in-progress still face downward pressure. For predicting major market indicators in 2026, the report primarily uses the medium-term inventory sell-through rate as a key metric. Assuming market performance continues at 2024-2025 levels represents a pessimistic scenario. An improvement in the sell-through rate back to 2022-2023 levels (reflecting high expectations for policy effectiveness) is considered the neutral scenario. A return to pre-2022 prosperity levels constitutes the optimistic scenario. Under the neutral scenario, the forecast is for new commercial housing sales area to decline by 9%, new construction starts by 9%, completed area by 21%, real estate investment by 12%, and construction-in-progress area by 8%. Under the optimistic scenario, construction starts and land transactions are expected to turn positive.
Reshaping of Supply-Demand Dynamics in the Domestic Property Market; Top 10 Developers' Land Market Share Exceeds 30%. The real estate industry is gradually transitioning from a "dual-seller" market to a "dual-buyer" market. Falling land prices and the relaxation of government planning rights have significantly enhanced the operational stability and profitability of leading developers. The land acquisition market share of the top 10 developers reached 32% in 2025, 13 percentage points higher than their current sales market share. It is projected that under the neutral scenario, the sales value of the top 10 developers will increase by 5% year-on-year in 2026.
Risk warnings include potential declines in housing prices and transaction volumes exceeding expectations; policy entering uncharted territory with reduced effectiveness; and the need for continuous observation regarding the sustainability of improvements in new home sell-through rates.
