Xin Lang Cai Jing·2025-12-03 00:40Core Viewpoint - The real estate industry is nearing the end of its downward cycle, with supply-demand structure optimization leading to recovery [2][9] Group 1: Market Conditions - The real estate industry has been in a downward cycle for nearly five years and is approaching a stabilization point based on international experience [2][9] - Key indicators show significant progress in market adjustments: the narrow inventory (completed unsold residential properties) has decreased from approximately 470 million square meters at the beginning of the year to nearly 400 million square meters [2][9] - New construction area has returned to levels seen in 2002-2003 and is expected to hit bottom by 2026, with real estate development investment likely to stabilize and recover gradually [2][9] Group 2: Demand Structure Changes - A fundamental change in the demand structure for real estate is anticipated, with improvement-type demand expected to account for 40%-50% of total demand, becoming the absolute mainstream [3][10] - The quality of improvement-type residential products has significantly improved, with usable area rates rising from 75%-78% to over 90%, and some projects exceeding 100% [3][10] - Height standards have increased from 2.8-2.9 meters to 3.2 meters or even 3.45-3.6 meters, along with enhancements in decoration standards, public space design, property service quality, and community facilities [3][10] Group 3: Path to Recovery - Two core paths to quickly exit the low point of the industry are identified: the natural market clearing process is nearing completion, and further policy support is needed [4][11] - Recommendations include implementing more substantial measures on the demand side, such as lifting restrictive measures, providing home purchase interest subsidies, or combining with interest rate cuts to lower purchasing costs and boost market confidence [4][11] Group 4: Economic Role and Urbanization - Despite technological innovation being a core driving force, the real estate sector's pillar status in the economy remains unchanged, with its GDP share expected to stabilize around 6%-7% [5][12] - As urbanization enters its later stages, the trend of population concentration in core urban areas is expected to become more pronounced, providing long-term support for real estate development in major city clusters [5][12] Group 5: Investment Insights - Risks from past debt defaults and policy fluctuations have largely been reflected in expectations and stock prices, with the industry clearing entering its later stages [6][13] - Even during the industry adjustment period, companies with "alpha" characteristics have emerged, with several mid-sized real estate firms growing into industry leaders since 2019 [6][14] - An important positive signal is the upward trend in gross profit margins reported by some real estate companies in their mid-2025 reports, with expectations for clearer recovery trends in 2026-2027 [6][14]