Core Insights - The real estate market is expected to enter a destocking phase during the "15th Five-Year Plan" period, with overall housing prices declining and investment demand significantly weakening [1][21]. Macro Factors Impacting Housing Demand and Market Structure - Both total housing demand and supply are likely to contract further, driven by long-term population decline and slower urbanization [2][3]. - The supply side may contract more than the demand side due to high risks for real estate companies and limited investment capacity, leading to a more balanced supply-demand relationship [1][2]. - Structural market characteristics will become more pronounced, with urbanization focusing on key city clusters, enhancing competitiveness in high-tier cities [1][4]. Changes in Population and Housing Demand - China is entering a population reduction cycle, with a projected decrease of approximately 4.8 million people by 2030 [2]. - The number of eligible homebuyers is expected to decline by 21 million, with the proportion of this group in the total population dropping from 39.2% to 38% [2]. - However, the structural change in the homebuyer population will support stable growth in improvement demand, particularly in coastal megacities [2][3]. Regional Differentiation in Demand - Demand will increasingly concentrate in key city clusters, with sales in these areas expected to account for 80% of the national total, up from 75% [4]. - Urbanization is projected to increase the urban population to 983 million by 2030, with per capita residential area rising to 44.6 square meters [3][4]. Real Estate Supply and Demand Dynamics - The housing inventory is at a historical high, indicating a serious oversupply situation that will take time to digest [5][10]. - The leverage ratio of households is expected to decline from around 61% to 54% by the end of the "15th Five-Year Plan" [5][10]. Policy Responses to Market Conditions - The overall housing policy will focus on releasing demand and guiding the market towards a balanced supply-demand relationship [13][16]. - Policies will include accelerating the destocking of commercial housing and maintaining a supportive environment for personal home purchases [14][15]. Market Outlook for the "15th Five-Year Plan" - The total demand for urban residential building area is projected to be around 3 billion square meters, with an average annual new housing demand of about 600 million square meters [16][21]. - Housing prices are expected to decline at a slower rate, with new home prices projected to drop by 1% annually and second-hand home prices by 2% [17][21]. - The inventory of unsold commercial housing is expected to decrease by about 40% by the end of the "15th Five-Year Plan" [17][21]. Recommendations for Targeted Policies - Suggestions include significantly lowering home purchase costs, implementing regional housing policies for major cities, and preventing housing financial risks [22][23][24]. - Establishing a real estate stability fund to effectively manage risks and improve market confidence is also recommended [24][25].

Core Insights - The narrative of wealth and destiny in China has been shattered, as exemplified by the "拆二代" (demolition second generation) now delivering food, highlighting the fleeting nature of compensation from property demolition [1][12] - The golden era of real estate has ended, with a slowdown in property prices and a decline in urban expansion, leading to questions about future economic sustainability [3][5] - The reliance on real estate for economic growth has created a precarious situation, where a downturn in the sector could destabilize various industries and employment [7][8] Economic Structure - The past two decades have seen a reliance on land finance to support local development, with real estate driving multiple industries and families accumulating debt [5][7] - The demographic shift, including a declining birth rate and reluctance among youth to marry and have children, poses a challenge to sustaining the real estate-driven economic model [5][8] - The wealth generated from property transactions has not translated into sustainable income for many, leading to a return to financial instability for those who once benefited from demolition compensation [5][10] Future Directions - A shift away from real estate as the primary growth engine is necessary, focusing instead on industrial upgrades, technological innovation, and human capital development [8][10] - There is a need to reform the fiscal system to reduce dependence on land finance and create a more sustainable local revenue model [8][10] - Urbanization should be redefined to ensure equitable resource distribution between urban and rural areas, moving towards urban renewal rather than large-scale demolition [10][12]

Core Viewpoint - The Central Urban Work Conference held on July 14-15 marks a significant shift in China's urbanization strategy, moving from rapid growth to stable development, emphasizing quality improvement and efficiency in existing urban areas [1][2] Group 1: Urban Development Strategy - The conference highlights the transition of urbanization from large-scale expansion to enhancing the quality and efficiency of existing urban spaces, indicating a need to abandon wasteful resource use and over-investment [1] - The focus is on developing "group-style urban agglomerations" to address resource misallocation and enhance urban governance capabilities, aligning with a more people-centered urban development philosophy [1] Group 2: High-Quality Urban Renewal - The emphasis is on "high-quality urban renewal," which differs from past approaches that relied on large-scale demolition and construction, aiming instead for comfortable and livable cities [2] - Key initiatives include the gradual transformation of urban villages, safety upgrades to urban infrastructure, and the protection of historical and cultural buildings, requiring collaboration with social capital and REITs for sustainable operations [2] Group 3: Innovation as a Core Driver - Innovation is prioritized in urban construction goals, with a focus on creating vibrant, innovative cities as a core task, reflecting its strategic importance in urban transformation [2] - The conference reiterates the need for local adaptation in developing new productive forces, emphasizing that technological innovation is crucial for countering demographic challenges and geopolitical pressures [2] - The reliance on infrastructure and real estate to drive economic growth is deemed outdated, with future urban development expected to depend more on technological innovation and industrial progress [2]

Core Viewpoint - Chaoyang District in Beijing is set to significantly increase its residential land supply over the next three years, with a total of 30 plots being made available, attracting over 30 major developers and financial institutions [1] Land Supply Plan - Northern Area: Approximately 500,000 square meters, which is relatively low [3] - Eastern Area: About 830,000 square meters [4] - Southern Area: The largest supply at around 1,100,000 square meters, indicating a ratio of supply among the three areas of approximately 2:3:4 [5] Market Implications - Northern Area: Limited land supply may stabilize or even increase property prices, leading to a slower turnover in the second-hand housing market, making it a more exclusive area for high-net-worth individuals [6] - Southern Area: Increased supply may lead to more affordable prices, attracting first-time buyers and those looking to upgrade their homes, along with improved infrastructure such as schools and hospitals [6] - Accelerated Demolition and Relocation: The government plans to speed up demolition and relocation processes, which could lead to a revitalized urban landscape and increased demand for housing as residents receive compensation [6] Broader Context - Recent trends in cities like Shanghai and Shenzhen show a rise in "land kings," boosting local real estate confidence, with Chaoyang being a prime candidate for new high-value land sales [7] - The recent Central Urban Work Conference emphasized urban renewal and development of urban clusters, indicating potential future changes in policy that could impact the real estate market [9] Future Outlook - With central government planning and local initiatives, the Beijing real estate market, particularly in Chaoyang, is expected to undergo significant changes in the near future [11]

Investment Rating - The report maintains a "Positive" investment rating for the building materials industry, indicating an expectation of performance that exceeds the market benchmark by more than 5% [2][19]. Core Insights - The recent Central Urban Work Conference has provided specific guidance for urban development, aiming to promote a new balance between supply and demand in the real estate sector, which is expected to lead to a long-term healthy development of the industry [4][5]. - The conference emphasizes the construction of modern urban clusters and the promotion of urban renewal, which will enhance the quality of urban infrastructure and housing supply, thereby supporting the recovery of building materials demand [5][6]. - The report highlights that the industry is currently experiencing a historical low in market sentiment, which is accelerating the process of industry consolidation and the elimination of outdated production capacity [6][11]. Summary by Sections Urban Development and Policy - The Central Urban Work Conference serves as a directive for urban modernization in China, with a focus on high-quality urban development and the enhancement of living conditions [4][5]. - The conference outlines the need for innovative, livable, and resilient cities, which will drive the demand for building materials as urban infrastructure is upgraded [5]. Industry Demand and Supply Dynamics - The report anticipates that the policies from the conference will stimulate demand in the real estate sector, leading to a stabilization of building materials demand over the next 3-6 months [6][11]. - The focus on urban renewal and infrastructure improvement is expected to create a new balance between supply and demand in the building materials industry, benefiting leading companies in the sector [11]. Market Performance and Outlook - The building materials industry is projected to see a recovery in demand as urbanization progresses and policies are implemented, with a particular emphasis on the renovation of urban villages and old city areas [11]. - The report suggests that leading companies in the sector will benefit the most from these developments, as they are better positioned for growth and valuation recovery [11].

Core Viewpoint - The Central Urban Work Conference held in Beijing emphasizes the need to optimize the modern urban system to enhance the comprehensive carrying capacity of cities for population and socio-economic development [1] Group 1: Urban Development Strategy - The conference focuses on developing group-style and networked modern urban clusters and metropolitan areas [1] - It advocates for a categorized approach to urbanization, with county towns as important carriers [1] - The initiative aims to continue the urbanization of the agricultural transfer population [1] Group 2: Coordination and Integration - The meeting promotes coordinated development among large, medium, and small cities, as well as small towns [1] - It emphasizes the importance of urban-rural integration development [1]