GUOTAI HAITONG SECURITIES·2026-01-20 03:10Investment Rating - The report assigns an "Overweight" rating for the real estate industry [4]. Core Insights - The real estate sector is expected to experience a noticeable decline in 2025, aligning with earlier predictions that companies would maintain positive cash flow and that there would be no financial risks throughout the year. The focus will shift from finance to economic aspects in 2026 [2]. - The anticipated theme for 2026 is "high-quality development," with an emphasis on urban renewal. Recommended companies include Vanke A, Poly Developments, China Overseas Development, and Longfor Group among others [59]. - The total investment in real estate development is projected to be 8.3 trillion yuan, with sales amounting to 8.4 trillion yuan, achieving the goal of no financial risks for the year. The industry is expected to continue reducing investment, primarily in construction, which will further alleviate spending pressures [59][60]. Summary by Sections Investment Overview - In 2025, the cumulative real estate development investment is expected to decline by 17.2% compared to 2024, with residential investment decreasing by 16.3% [13][11]. - The total sales amount for commercial housing is projected to drop by 12.6% year-on-year [10][11]. Sales and Construction Data - The total sales area of commercial housing for 2025 is estimated at 881 million square meters, reflecting an 8.7% year-on-year decrease [25][10]. - The new construction area is expected to decline by 20.4% year-on-year, while the completion area is projected to decrease by 18.1% [18][9]. Funding Sources - The total funding for real estate development is anticipated to reach 9.31 trillion yuan, with a year-on-year decline of 13.4% [43][11]. - Domestic loans are expected to account for 15.14% of the funding sources, with a year-on-year decrease of 7.3% [47][49]. Market Dynamics - The unsold housing area at the end of 2025 is projected to be 766 million square meters, with a year-on-year increase of 1.6% [60][37]. - The report emphasizes the importance of understanding the real estate sector's impact on the economy, focusing on physical construction rather than virtual rental income [61].