Report on the Bottoming Timing and Investment Opportunities of the Real Estate Industry

Based on the above research and analysis, I will provide you with an in-depth report on the bottoming timing of the real estate industry and its impact on investments in the A-share and Hong Kong-listed real estate sectors.

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According to research from authoritative industry institutions such as the China Index Academy and Yihan Think Tank, the current round of real estate adjustment started in the second half of 2021 and has lasted for approximately four and a half years to date. In terms of sales area, the national new commercial housing sales area in 2025 was approximately 880 million square meters, contracting by nearly half from the 2021 peak (1.79 billion square meters), and has returned to the 2009 level [1][2].

Ding Zuyu clearly stated at the 2026 annual conference of “Ding Zuyu on Real Estate” that

[1]. This judgment is highly aligned with the forecast of the China Index Academy, which emphasizes that as the first year of the 15th Five-Year Plan, front-loaded policy efforts and improved supply-demand relations will drive market bottoming in 2026, with the bottoming process expected to be completed in the mid-to-late period of the 15th Five-Year Plan (around 2028) [2][3].

According to industry research, the bottoming of the residential market requires the following

[1]:

Definitive Factor	Current Status	Assessment
Policy Certainty	Continuous policy easing; the 15th Five-Year Plan emphasizes “promoting high-quality development of the real estate industry”	✅ Already Emerged
Housing Price Certainty	Housing prices in first-tier cities have basically bottomed out, while third- and fourth-tier cities still have room for adjustment	🔄 Structural
Product Certainty	“Good housing” is included in the Government Work Report, marking the start of the era of product strength competition	✅ Already Confirmed
Supply Certainty	Effects of curbing incremental supply and destocking are emerging, and supply-demand relations are tending to balance	✅ Gradually Improving

Positive changes have emerged in market inventory pressure [1][4]:

• Short-term Inventory
  : Has stopped growing
• Medium-term Inventory
  : Has peaked and declined
• Long-term Inventory
  : Is stabilizing
• Effective Inventory
  : Approximately 5 billion square meters, equivalent to 5-6 times the annual sales area, which is within a healthy range

The land market shows a trend of “quality improvement and volume reduction”. From January to November 2025, residential land supply in 300 cities nationwide decreased by 19.2% year-on-year, while transactions decreased by 14.7% year-on-year. However, the transaction floor price increased by 10.9% year-on-year, indicating that high-quality plots in core cities are still favored [4].

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The A-share real estate sector in 2025 showed a pattern of

. From the perspective of industry researchers, significant differentiation has emerged within the sector, with capital shifting from traditional real estate enterprises characterized by “high leverage, high debt, and reliance on land reserves” to high-quality targets featuring “low debt, strong operations, and focus on the stock market” [5].

The

pattern shows that central and local SOEs have become the market main force [6]:

Rank	Developer	Nature	Sales Volume (Billion Yuan)
1	Poly Developments	Central SOE	2,530
2	Greentown China	Central SOE	2,519
3	China Overseas Land & Investment	Central SOE	2,512
6	China Vanke	Mixed-ownership	1,339
10	Binjiang Group	Private Enterprise	101.76

According to industry data, the current valuation level of the A-share real estate sector is attractive:

• PE(TTM)
  : Approximately 12-15 times, at a historical low
• PB
  : Approximately 0.8-1.0 times, close to or below net asset value
• Dividend Yield
  : Some high-quality real estate enterprises reach 3%-5%
• NAV Discount
  : Overall discount of 40%-50%

:

1. Policy bottom has emerged
   : Intensive policies were introduced in late 2025, and Qiushi Magazine clearly stated that “the real estate industry is an important industry of the national economy and an important source of residents’ wealth” [7]
2. Sales decline has narrowed
   : From January to November 2025, the cumulative national commercial housing sales area decreased by 7.8% year-on-year, which was significantly narrower than the earlier period [4]
3. Valuation is at a historical low
   : Institutions generally believe that the sector has fully reflected pessimistic expectations

:

• Credit risks of real estate enterprises still require attention
• Destocking pressure in third- and fourth-tier cities remains high
• Fundamental recovery takes time

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The Hong Kong-listed real estate sector (especially mainland property stocks) has greater volatility, but

[8]:

Indicator	Hong Kong-listed Mainland Property Stocks	A-share Real Estate Sector
PE(TTM)	5-8 times	12-15 times
PB	0.3-0.5 times	0.8-1.0 times
Dividend Yield	5%-8%	2%-4%
NAV Discount	50%-70%	40%-50%

Hong Kong-listed mainland property stocks have performed actively recently [8]:

• China Vanke (02202) rose 6.85% to HK$3.59
• R&F Properties (02777) rose 5.88% to HK$0.54
• Sunac China (01918) rose 3.45% to HK$1.20

. Huatai Securities pointed out that Hong Kong-listed mainland real estate enterprises have considerable valuation recovery room, and against the backdrop of Hong Kong’s property market recovery, high-quality assets with high dividend characteristics are expected to experience a “valuation + earnings” double boost [9].

:

1. High-dividend central and local SOEs
   : Poly Property Services, China Overseas Property Services, etc., which have stable cash flow and high dividend characteristics
2. Distressed developer plays
   : Some distressed developers have made progress in debt restructuring, creating opportunities for value revaluation
3. Property services sector
   : Under the logic of the stock market, property management business has good growth potential

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Based on multi-dimensional analysis,

:

2024 Q4   2025 Q1   2025 Q2   2025 Q3   2025 Q4   2026 Q1   2026 Q2   2026 H2
   ▓         ▓        ▒▒        ▒▒▒       ▒▒▒▒      ▒▒▒▒      ▒▒▒▒▒     ▒▒▒▒▒▒
Observation Period      →      Gradual Position Building    →     Add-on Position Window    →    Hold for Upside    →   Harvest Period

:

• Late 2025 to Early 2026
  : Policy effects gradually emerge, and sales stabilize
• Full Year 2026
  : Market bottom is confirmed, and valuation recovery continues
• After 2027
  : The industry enters a stage of high-quality development, and high-quality real estate enterprises undergo value revaluation

Catalyst	Expected Time	Recovery Strength
Stabilization and rebound of sales area	H1 2026	★★★
Housing prices stop falling and stabilize	H2 2026	★★★★
Improvement of developers’ profitability	2026-2027	★★★
Continuous policy intensification	Ongoing	★★
Foreign capital inflow and allocation	H2 2026	★★★

:

1. Sales fall short of expectations
   : If demand recovery is slow, the cash flow pressure on real estate enterprises will increase
2. Credit risk spreads
   : Some small and medium-sized real estate enterprises may still default
3. Macroeconomic pressure
   : Recovery of residents’ purchasing power takes time

:

1. Policy exceeds expectations
   : Full lifting of purchase restrictions in first-tier cities
2. Rapid destocking
   : Supply shortage drives housing price increases
3. Large-scale foreign capital inflow
   : Accelerated valuation recovery of the Hong Kong-listed sector

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Market	Investment Rating	Core Logic	Recommended Target Types
A-share	Overweight	Low valuation, led by central and local SOEs, policy support	Poly Developments, China Merchants Shekou, China Vanke A, China Resources Land
Hong Kong-listed	Overweight	Lower valuation, high dividend, higher elasticity	China Resources Land, China Overseas Land & Investment, Yuexiu Property

:

• Leading central and local SOEs: Poly Developments, China Overseas Land & Investment, China Resources Land
• Financially stable mixed-ownership enterprises: China Vanke, Binjiang Group

:

• Property services: Poly Property Services, China Overseas Property Services, China Resources Mixed-use Lifestyle
• Hong Kong-based real estate enterprises: Wharf Real Estate Investment Company, Hongkong Land

:

• Distressed developers: Sunac China, R&F Properties (need to closely monitor debt restructuring progress)

1. Current to Q1 2026
   : Gradually build positions, add on dips
2. Q2 2026
   : Increase allocation after confirming the fundamental inflection point
3. H2 2026
   : Harvest gains from valuation recovery

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The real estate industry is in a

. According to forecasts from authoritative industry institutions such as the China Index Academy, the market is expected to confirm its bottom in 2026, and complete bottoming in the mid-to-late period of the 15th Five-Year Plan (around 2028).

For the A-share and Hong Kong-listed real estate sectors:

• Current valuations have fully reflected pessimistic expectations
  , with sufficient safety margins
• Continuous policy efforts
  provide support for valuation recovery
• Leading central and local SOEs will take the lead in recovery
  , driving the sector’s performance
• The Hong Kong-listed sector has greater valuation recovery room
  , but also higher volatility

: Currently in the position-building window period, it is recommended to gradually allocate to leading central and local SOEs and high-quality mixed-ownership real estate enterprises to share the investment opportunities brought by the sector’s valuation recovery.

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[1] Key Signals for the Real Estate Market! Multiple Institutions Predict 2026 Will See Bottoming and Stabilization - 21st Century Business Herald

[2] 2025 Top 100 Billion-yuan Developers Shrink to 10, Central and Local SOEs Dominate the Rankings - China Times Network

[3] Heavy Positive News in 2026! A Wave of Signals Released by the Real Estate Market - Sina Finance

[4] 2026 Annual Strategy for the Real Estate Industry - Market Gradually Bottoms Out and Stabilizes - Soochow Securities Research Institute

[5] First Shot of 2026 Real Estate Market! Central Media Makes Important Statement - NetEase Finance

[6] 22 of the 30 Key Listed Real Estate Enterprises Saw Month-on-Month Growth in Single-Month Performance in December 2025 - Investing.com China

[7] Adhere to Bottom Line, Actively and Steadily Resolve Risks in Key Areas - People’s Daily Online

[8] Hang Seng Index Closes Down 0.28%, Optical Communication, Mainland Property Stocks and Other Sectors Active - Investing.com China

[9] Institutional View: Three Positive Factors Build a Long-term Positive Pattern for Hong Kong Stocks - Eastmoney.com