Core Viewpoint - The real estate market is experiencing a shift, with state-owned enterprises and construction companies becoming significant players in land acquisition, while facing challenges in property sales due to ongoing market adjustments and high inventory levels [2][3]. Group 1: Market Dynamics - The real estate landscape has changed after three years of clearing, with state-owned enterprises and construction companies emerging as key players in land acquisition [2]. - Despite some signs of stabilization in the market, there remains significant disparity between cities and property types, with high-end projects in core cities performing better than those in less desirable areas [3][4]. - In the first four months of the year, the national new housing market generated 2.7 trillion yuan, a year-on-year decline of 3.2%, with residential sales down by 1.9% [3]. Group 2: Sales Challenges - Projects from construction companies and local investment platforms are struggling with low sales rates, with some new launches in Guangzhou achieving only single-digit sales rates [4][6]. - For instance, the Zhongjian Tianyu project in Guangzhou saw a drastic price reduction from 4.98 million yuan to 3.98 million yuan, yet still only managed to sell 9 units, resulting in a 6% sales rate [4][5]. - The challenges are compounded by factors such as poor location, inadequate amenities, and a mismatch between product offerings and market demand [6][7]. Group 3: Construction Companies' Position - Construction companies entering the real estate market face difficulties due to their lack of experience in property development, leading to lower sales performance [6][7]. - The "China Construction" group, despite being a leader in sales, reported a 34.1% year-on-year decline in profits from its real estate segment due to market adjustments [9]. - The competitive landscape is fierce, with many projects in high-supply areas resorting to price cuts to attract buyers [9][10]. Group 4: Local Investment Platforms - Local investment platforms have increased their land acquisition activities, reaching a peak of 64% of total land purchases in 2024, but often lack the operational capacity to develop these projects effectively [14][15]. - The opening rates for projects acquired by local investment companies are significantly lower than those of state-owned and central enterprises, indicating a potential for low sales rates [15]. - There is a growing trend of local governments considering the repurchase of idle land from these platforms, which may alleviate some financial pressures [16].

Core Insights - The real estate market is facing challenges with high land acquisition but low sales, particularly for construction companies and local state-owned enterprises [2][3] - The market has seen a shift in players, with state-owned enterprises and construction companies becoming more prominent as private companies retreat [2][6] - Despite some signs of stabilization in the market, significant disparities exist between cities and projects, with many struggling to sell despite price reductions [3][4] Group 1: Market Dynamics - The new housing market in China sold 2.7 trillion yuan in the first four months of the year, a year-on-year decrease of 3.2%, with residential sales down by 1.9% [3] - In Guangzhou, some construction and state-owned projects have low sales rates, with new projects achieving only single-digit sales rates [2][3] - The market is characterized by a price war, particularly in areas with high inventory, affecting the sales performance of construction company projects [2][3][4] Group 2: Challenges Faced by Construction Companies - Construction companies entering the real estate market are facing difficulties due to their lack of experience in property development [4][5] - Projects like Zhongjian Tianyu in Guangzhou have seen significant price cuts, yet still struggle to sell, with a sales rate of only 6% as of late May [3][4] - The competitive landscape is tough, with projects facing challenges from better-located or better-equipped competitors [4][5] Group 3: Performance of State-Owned Enterprises - State-owned enterprises have increased their presence in land acquisition, with a peak of 64% of land purchases in 2024 [10] - However, many state-owned projects have low construction initiation rates, with only 8.5% of new land acquisitions in 2024 starting construction [10][11] - The trend of "state-owned land acquisition + real estate company construction" is becoming more common, as state-owned enterprises seek partnerships with more experienced developers [12] Group 4: Financial Performance and Strategy - The real estate segment of major construction companies like China State Construction saw a 34.1% decline in profit due to market adjustments [6] - Companies are shifting strategies from expansion to cash flow management, focusing on inventory reduction and project quality [7][8] - The integration of real estate operations within construction firms is seen as a way to leverage their existing strengths, such as cost control and supply chain advantages [9]