Goldman Sachs(US:GS) Sou Hu Cai Jing·2025-09-17 00:57Core Insights - The report by Goldman Sachs predicts a potential price increase in the real estate market of six major urban clusters in China by 2027, driven by economic restructuring, population migration, and urbanization [2][3][19] - The report highlights a significant regional differentiation in the real estate market, with the six urban clusters expected to outperform the national average in price recovery [3][13] Regional Analysis - Beijing-Tianjin-Hebei: The region is expected to benefit from strong policy support and a reversal in population outflow, with a projected net growth rate of 0.3% starting in Q1 2025. The number of high-tech enterprises surged by 17.3% in 2024 [3][4][5] - Yangtze River Delta: This area, with a GDP share of 24.7% of the national total, is predicted to see a cumulative price increase of 12.6% by 2027, bolstered by a 21.5% rise in patent applications in 2024 [5][6] - Pearl River Delta: The region is benefiting from the rapid development of the Guangdong-Hong Kong-Macau Greater Bay Area, with a projected price increase of 13.7% by 2027, supported by a 9.2% year-on-year growth in foreign investment [6][7] - Chengdu-Chongqing: This western economic hub is expected to see an 11.5% price increase by 2027, driven by a GDP growth rate of 7.3% in Q1 2025, which is above the national average [7][8] - Central Plains: The region is projected to experience an 8.2% price increase by 2027, supported by a 16.8% growth in infrastructure investment and a 13.5% increase in high-tech industry value added in 2024 [8][9] - Yangtze River Middle Reaches: This area is expected to see a 9.3% price increase by 2027, with a reported 8.7% growth in industrial output value in 2025 [9][10] Driving Forces - The anticipated price increases in these urban clusters are underpinned by strong industrial upgrades and population influx, with high-tech enterprises accounting for 68.3% of the national total and an average R&D investment intensity of 3.2% [10][11] - The net population growth rate in these urban clusters averages 0.8%, significantly higher than other regions, indicating a strong attraction for young labor due to quality public resources [10][11] Policy and Financial Support - The Chinese government is actively promoting a new real estate development model focused on housing for living rather than speculation, with measures such as reduced down payment ratios and adjustments to mortgage rates [11][14] - The real estate-related loan balance reached 53.7 trillion yuan in 2025, with a year-on-year growth of 5.3%, indicating a supportive financial environment for market recovery [14][15] Conclusion - Overall, the report reflects a significant transformation in China's real estate market, emphasizing quality and efficiency over rapid growth. The six urban clusters are expected to lead the recovery, with a focus on sustainable development and the return to housing's fundamental purpose [16][17][19]