Investment Rating - The report does not explicitly provide an investment rating for the real estate industry Core Insights - The report highlights the increasing scale of unsold residential properties and idle land, prompting the central government to promote the acquisition of these assets to adjust market supply and demand [7][10] - The report indicates that various local governments are responding to land acquisition policies, but comprehensive implementation will take time [16][19] - Several real estate companies have successfully acquired land, with considerations on whether to use price increases for repurchase or cash compensation [21][25] - The report concludes that while the intention behind land acquisition is positive, it faces multiple challenges that need to be validated by the market [26][28] Summary by Sections Section 1: Government Initiatives for Land Acquisition - The report states that the scale of unsold residential properties reached approximately 67.3 million square meters by the end of 2023, with a projected increase to 75.3 million square meters by the end of 2024, marking an 11.9% year-on-year growth [7][10] - Following a liquidity crisis in 2021, land acquisition by real estate companies plummeted, with a 15.4% decrease in 2021 and a further drop to 10.0 million square meters in 2022 [8][10] - The central government has introduced policies to support local governments in acquiring unsold properties and idle land, including a 300 billion yuan special loan for affordable housing [10][11] Section 2: Local Government Responses - Local governments have begun to issue guidelines for land acquisition, primarily at the city or district level, with major cities having fewer announcements due to existing land recovery processes [16][17] - The report notes that land acquisition by real estate companies in 2024 is expected to be limited, with Guangdong province leading the way in 2025 [19] Section 3: Successful Land Acquisitions by Companies - Vanke successfully acquired three residential plots in Guangzhou, adjusting the land use from commercial to residential without additional cash outlay, thereby enhancing the potential value of the land [21][24] - The report discusses the strategic decisions made by companies regarding land acquisition, including price adjustments and the use of special bonds for funding [25] Section 4: Challenges in Land Acquisition - The report identifies several challenges in the land acquisition process, including financial constraints on local governments, the complexity of coordinating multiple departments, and the difficulty in determining acquisition prices [26][28] - It emphasizes the need for companies to release land from mortgage obligations to facilitate the acquisition process, which can be financially burdensome [28][29]