Investment Rating - The report maintains an "Outperform" rating for the real estate industry, indicating a positive outlook compared to the broader market [4]. Core Insights - The report highlights a strategic shift among mainland real estate companies from development to commercial operations, with firms like China Resources Land and Joy City expected to benefit from this transition [9][41]. - The report categorizes real estate companies based on their rental income performance, identifying three distinct groups: those with stable growth, those with slight fluctuations, and those experiencing significant declines [21][34]. Summary by Sections 1. Differences in Commercial and Development Ratios Among Companies - Mainland real estate firms are adopting a "development + commercial" dual-driven model, with companies like New Town Holdings and Longfor Group transitioning towards commercial operations [14]. - Hong Kong-backed firms prefer a purer commercial operation model, focusing on quality over quantity in their projects [14]. 2. Comparison of Commercial Real Estate Operational Efficiency - Hong Kong-backed firms generally have fewer but higher-quality commercial projects, leading to better rental yields and resilience in occupancy rates compared to mainland firms [35]. - China Resources Land leads in shopping center rental efficiency due to its strategic positioning in major cities [35]. 3. Investment Recommendations - The report suggests focusing on mainland firms that are transitioning to commercial operations, particularly those benefiting from the rollout of commercial real estate REITs, such as China Resources Land and Joy City [41]. - It also recommends defensive stocks with high asset quality and competitive dividend yields, including Swire Properties, Kerry Properties, and Hang Lung Properties [41].

Core Insights - The report discusses the implementation of the "Tax Law Principle" and its implications for service industries such as internet and finance, indicating that current tax arrangements are unlikely to change significantly in the short term [2][3][12] - The real estate sector is experiencing a favorable shift in financing policies, with REITs and private placements opening new equity financing channels to alleviate financial pressures on real estate companies [3][13] Tax Law Implementation - The State Council approved the "Implementation Regulations of the Value-Added Tax Law of the People's Republic of China" on December 19, 2025, and subsequent announcements have clarified tax details, suggesting stability in tax arrangements for service industries [2][3][12] - The definition of "basic services" in telecommunications is evolving, with mobile data and internet broadband still classified as "value-added services" subject to a 6% VAT rate, while traditional voice services are recognized as "basic services" with a 9% VAT rate [2][3][12] Real Estate Sector Analysis - The financing environment for the real estate industry is improving, with a shift from debt financing to equity financing, including the introduction of REITs and private placements [3][13] - Recent regulatory changes, such as the gradual retreat from the "three red lines" policy, indicate a more supportive financing environment for real estate companies [13] - The report maintains a "positive" rating for the real estate sector, highlighting the potential for recovery in the industry as financing policies become more favorable [3][13] Investment Recommendations - The report recommends several quality real estate companies for investment, including China Jinmao, Poly Developments, and China Resources Land, among others, due to their potential for recovery and attractive valuations [13] - The report emphasizes the importance of monitoring the evolving financing landscape and the impact of government policies on the real estate market [3][13]

Investment Rating - The report rates the real estate industry as "Outperform" compared to the market [2] Core Insights - New home sales in December showed a month-on-month increase of 33.6%, with a year-on-year decline of 32.1%, indicating a narrowing of the decline compared to previous months [5] - The second-hand home sales saw a year-on-year decline of 30.7% in December, with a month-on-month increase of 12.7%, reflecting a worsening trend in the second-hand market [5] - The overall inventory of new homes decreased by 0.1% month-on-month and 8.3% year-on-year, with an average de-stocking period of 17.8 months [5] Summary by Sections New Home Sales - December new home sales area increased by 33.6% month-on-month, but decreased by 32.1% year-on-year, with the decline narrowing by 6.6 percentage points [5] - For the entire year of 2025, new home sales decreased by 14%, with a year-on-year decline of 13.7% across 40 cities [5] - First-tier cities experienced a year-on-year decline of 15.8%, while second-tier and third-fourth tier cities saw declines of 12.6% and 13.6% respectively [5] Second-Hand Home Sales - December saw a year-on-year decline in second-hand home sales of 30.7%, with a month-on-month increase of 12.7% [5] - The overall second-hand home sales for 2025 decreased by 4%, with first-tier cities still showing positive growth [5] Inventory and De-stocking - The inventory of new homes decreased by 0.1% month-on-month and 8.3% year-on-year, with a de-stocking period of 17.8 months [5] - Major cities like Shanghai and Hangzhou have de-stocking periods within 12 months [5] Land Market - The land market in December showed a month-on-month increase of 126.7%, but a year-on-year decline of 8.9% [5] - The average land price was 1392 RMB per square meter, with a year-on-year decrease of 10.3% [5] Real Estate Companies - The top 100 real estate companies saw a year-on-year sales decline of 20% in 2025, with December sales showing a narrowing decline of 26.7% [5] - The land acquisition amount for December decreased by 58.1% year-on-year, while the total acquisition amount for 2025 increased by 2.6% [5] Financing - The financing scale for the real estate industry decreased in December, but showed a year-on-year increase for the entire year [5] - The total issuance of domestic and foreign bonds and ABS in 2025 was 596.7 billion RMB, a 6% increase year-on-year [5] Policy - The central government emphasized stabilizing the real estate market and reducing the value-added tax on personal home sales to 3% [5] - Local policies have been adjusted to optimize purchase restrictions and loan policies in cities like Beijing [5] Sector Performance - The real estate sector underperformed compared to the Shanghai and Shenzhen 300 index in December, with an absolute return of -4.0% [5] Investment Recommendations - The report suggests focusing on companies with stable fundamentals in core cities, smaller firms showing significant breakthroughs, and commercial real estate companies exploring new consumption scenarios [5]

Group 1 - Hong Kong local property stocks collectively rose today, with New World Development increasing by over 4%, and other companies like Sun Hung Kai Properties, Hang Lung Properties, Cheung Kong Property, and Sino Land rising by over 3% [1] - Notably, Sun Hung Kai Properties reached a historical high [1] Group 2 - New World Development's latest price is 9.830, with a market capitalization of 24.739 billion [2] - Sun Hung Kai Properties' latest price is 119.000, with a market capitalization of 344.836 billion [2] - Hang Lung Properties' latest price is 9.540, with a market capitalization of 48.24 billion [2] - Cheung Kong Property's latest price is 45.360, with a market capitalization of 158.75 billion [2] - Sino Land's latest price is 11.650, with a market capitalization of 110.494 billion [2] - Hysan Development's latest price is 21.660, with a market capitalization of 22.245 billion [2] - Kerry Properties' latest price is 23.620, with a market capitalization of 34.28 billion [2] - Kowloon Development's latest price is 26.800, with a market capitalization of 81.371 billion [2] - Swire Properties B's latest price is 12.640, with a market capitalization of 36.011 billion [2] - Link Real Estate Investment Trust's latest price is 35.840, with a market capitalization of 93.146 billion [2] - Kowloon Warehouse Group's latest price is 25.260, with a market capitalization of 77.195 billion [2] - Swire Properties' latest price is 23.200, with a market capitalization of 133.574 billion [2] - Champion REIT's latest price is 2.500, with a market capitalization of 15.338 billion [2] - Henderson Land's latest price is 30.300, with a market capitalization of 146.694 billion [2]

Core Insights - The real estate market continues to face downward pressure, with all 70 cities experiencing a decline in second-hand housing prices for four consecutive months, indicating a "catch-up" phenomenon in first-tier cities [9][19] - The average year-on-year decline in new housing prices across 70 cities in 2025 was 3.8%, which is less than the 4.5% decline in 2024, marking three consecutive years of decline [4][12] - The average year-on-year decline in second-hand housing prices was 6.3% in 2025, also less than the 7.4% decline in 2024, indicating a persistent downward trend for four years [4][12] Real Estate Market Performance - In December 2025, new home prices in 70 major cities fell by 0.4% month-on-month, while second-hand home prices decreased by 0.7%, maintaining the same rate of decline as in November [4][12] - The total sales area in December was 93.99 million square meters, with a year-on-year decline of 15.6%, showing a slight improvement from the previous month's decline of 17.3% [12][13] - The total investment in real estate development in December was 419.7 billion yuan, with a year-on-year decline of 35.8%, marking the largest single-month decline since 2000 [16][19] Housing Price Trends - In first-tier cities, new home prices fell by 0.3% month-on-month in December, with Shanghai showing a slight increase of 0.2%, while Beijing, Shenzhen, and Guangzhou experienced varying declines [5][9] - The average year-on-year decline in new home prices in first-tier cities was 1.8% in 2025, a reduction of 1.4 percentage points compared to 2024 [5][9] - Second-hand home prices in first-tier cities fell by 0.9% month-on-month in December, with an average year-on-year decline of 4.2% [5][9] Investment Recommendations - The report suggests focusing on three main lines: stable companies with high sales and land reserve ratios in core cities, smaller companies that have made significant breakthroughs in sales and land acquisition since 2024, and commercial real estate companies exploring new consumption scenarios [10][20] - Companies such as China Resources Land, Binjiang Group, and China Merchants Shekou are highlighted for their strong market positions [10][20] - The report anticipates potential policy adjustments by the end of Q1 2026, which could help stabilize the market [9][19]

Group 1 - Hong Kong local real estate stocks experienced a broad increase, with Hysan Development rising over 5% [1] - Other notable gainers include Kowloon Development and Kerry Properties, both up over 4%, while Kowloon Group and Sun Hung Kai Properties increased by over 3% [1] - Swire Properties B shares rose nearly 3%, and Longfor Group, Sino Land, Swire Properties A, and Swire Group all saw increases of over 1% [1] Group 2 - Hysan Development's latest price is 21.600 with a market capitalization of 221.83 billion [2] - Kowloon Development's latest price is 26.600 with a market capitalization of 807.64 billion [2] - Kerry Properties' latest price is 22.840 with a market capitalization of 331.48 billion [2] - Kowloon Group's latest price is 24.940 with a market capitalization of 762.17 billion [2] - Sun Hung Kai Properties' latest price is 113.900 with a market capitalization of 3300.57 billion [2] - Swire Properties B's latest price is 12.460 with a market capitalization of 354.98 billion [2] - Longfor Group's latest price is 43.960 with a market capitalization of 1538.5 billion [2] - Sino Land's latest price is 11.500 with a market capitalization of 1090.72 billion [2] - Swire Properties' latest price is 23.380 with a market capitalization of 1346.1 billion [2] - Swire Group's latest price is 74.400 with a market capitalization of 579.57 billion [2]

Market Performance - The real estate sector (CITIC) experienced a decline of -3.3% last week, while the CSI 300 and Wind All A indices changed by -0.6% and +0.5% respectively, resulting in excess returns of -2.7% and -3.8%[46] - Among 29 CITIC industry sectors, real estate ranked 26th in performance[46] New Housing Market - New home sales increased by 0.6% week-on-week but decreased by 36.8% year-on-year during the period from January 10 to January 16, 2026[8] - In major cities, new home transaction areas changed as follows: Beijing +16.3%, Shanghai +1.9%, Guangzhou +18.8%, and Shenzhen -0.6%[8] Second-Hand Housing Market - The transaction area for second-hand homes in 15 cities was 162.3 million square meters, down 1.8% week-on-week and down 8.4% year-on-year[14] - Cumulative transactions from January 1 to January 16, 2026, totaled 331.5 million square meters, reflecting a year-on-year decrease of 14.4%[14] Inventory and Absorption - Cumulative new home inventory in 13 cities reached 77.9 million square meters, with a week-on-week change of -0.1% and a year-on-year change of -4.7%[21] - The absorption cycle for new homes in 13 cities is 23.0 months, with a year-on-year increase of 6.6 months[21] Land Market - Land transaction area from January 12 to January 18, 2026, was 11.746 million square meters, down 21.9% week-on-week and down 49.7% year-on-year[38] - The average land price was 700 RMB/square meter, reflecting a week-on-week decrease of 44.4% and a year-on-year decrease of 51.1%[38] Investment Recommendations - Recommended mainland developers include: A-shares: Binjiang Group, China Merchants Shekou; Hong Kong stocks: China Overseas Development, Greentown China, China Resources Land, Jianfa International Group[7] - Suggested light-asset operation companies include: Property management: Greentown Service; Commercial management: China Resources Mixc Life; Leading intermediary platform: Beike-W[7] Risk Factors - Risks include potential underperformance of real estate regulatory policy relaxation, continued industry downturn, and persistent credit risks leading to liquidity deterioration[7]

Summary of Key Points from Conference Call Records Industry Overview - The records pertain to the real estate industry in China, specifically focusing on policies and market dynamics affecting urban development and housing. Core Insights and Arguments - The Ministry of Natural Resources and the Ministry of Housing and Urban-Rural Development issued measures to support urban renewal, allowing the use of existing land and property resources for state-supported industries with a transitional policy period not exceeding 5 years [2] - The 2026 National Housing and Urban-Rural Development Work Conference identified "high-quality urban renewal" as a key annual focus, emphasizing the implementation of various livelihood, development, and safety projects [2] - A sustainable model for urban renewal is proposed, involving government guidance, market operations, and public participation, with an emphasis on community engagement and the revitalization of idle assets [2] - The Guangzhou Housing and Urban-Rural Development Bureau plans to promote real estate market stability through strategies focused on "controlling growth, reducing inventory, and optimizing supply" [3] - In 2026, Guangzhou aims to complete fixed asset investments of 120 billion yuan in urban village renovations, with a focus on 52 new model projects to ensure the availability of resettlement housing [3] - The Beijing Planning and Natural Resources Committee has set a land supply plan for 2026, aiming for 65% of land supply to come from existing construction, with a specific focus on urban renewal [3] Additional Important Content - The records highlight the importance of legislative efforts for updating old housing and urban areas, including dilapidated buildings and historical districts, to enhance urban quality [3] - The emphasis on community involvement and the establishment of a legal framework for urban renewal indicates a shift towards more participatory governance in urban development [2][3]

Investment Rating - The report maintains a "Positive" rating for the real estate sector, focusing on high-quality real estate companies and commercial real estate [3][4][21]. Core Insights - The investment side of the real estate sector remains weak, with a year-on-year decline of 17.2% in total real estate development investment for 2025, and a significant drop of 35.8% in December alone [4][21]. - The sales side shows a narrowing decline in sales area, with a year-on-year decrease of 8.7% for 2025, and a 15.6% drop in December [22][32]. - The funding side indicates a continued decline in funding sources, with a 13.4% year-on-year decrease in total funding for real estate development in 2025, and a sharp 26.7% drop in December [37]. Summary by Sections Investment Side - Total real estate development investment for 2025 reached 828.8 billion yuan, down 17.2% year-on-year, with December's investment declining by 35.8% [4][21]. - New construction area decreased by 20.4% year-on-year, with December showing a 19.4% decline [20][21]. - The report adjusts 2026 forecasts, predicting a 7.7% decline in new construction and a 9.1% drop in investment [21]. Sales Side - The total sales area for 2025 was 880 million square meters, down 8.7% year-on-year, with December's sales area declining by 15.6% [22][32]. - The total sales revenue for 2025 was 8.4 trillion yuan, reflecting a 12.6% year-on-year decrease, with December's sales revenue down 23.6% [24][32]. - The average selling price of commercial housing for 2025 was 9,527 yuan per square meter, down 4.3% year-on-year [31][32]. Funding Side - Total funding sources for real estate development in 2025 amounted to 9.3 trillion yuan, a decrease of 13.4% year-on-year, with December's funding sources down 26.7% [37]. - Domestic loans saw a year-on-year decline of 7.3%, with a significant drop of 45% in December [37]. - The report anticipates that funding sources will gradually improve due to ongoing policy relaxations [37].

Core Viewpoint - The recent sale of a luxury apartment in the MontVerra project indicates strong demand in the high-end real estate market in Hong Kong, with significant transaction values being achieved [2] Group 1: Transaction Details - The latest sold unit is located in MontVerra, specifically the 2nd floor A unit of Block 2, with a usable area of 4,557 square feet, sold for HKD 190 million, translating to approximately HKD 41,694 per square foot [2] - To date, MontVerra has sold a total of 46 units, accumulating a total transaction value of approximately HKD 14.1 billion, with an average price per usable square foot of around HKD 59,000 [2] Group 2: Project Overview - MontVerra consists of 5 residential buildings and 3 exclusive villas, offering only 61 luxury apartments and 3 villas [2] - The usable area of the apartments ranges from 3,466 to 8,583 square feet, including standard apartments, garden apartments, and rooftop penthouses [2] - The villas have a usable area between 11,382 and 11,692 square feet, each featuring over 10,000 square feet of front and back gardens, outdoor swimming pools, elevators, and private parking [2]