Investment Rating - The investment rating for the real estate industry is "Positive" and maintained [11]. Core Insights - The pressure on the existing market poses challenges for pricing by real estate companies, but it is not the most significant factor affecting alpha. The real constraint on alpha is the contraction of market activity, with a relative shortage of investable cities and quality land. Although the number of participating companies has decreased compared to previous years, competition remains intense. The difficulty in replenishing effective inventory and high premium rates are notable challenges. To break the further contraction of market activity, policy support is essential, which, despite its limited overall effect, is expected to provide support for quality properties and structural markets [2][8]. Market Performance - The Yangtze River Real Estate Index decreased by 1.97% this week, with an excess return of -3.24% relative to the CSI 300, ranking 31 out of 32 industries. Year-to-date, the real estate index has increased by 6.58%, with an excess return of -9.93% relative to the CSI 300, ranking 26 out of 32 [5][16]. Policy Developments - The central government emphasizes the implementation of urban renewal actions, integrating it with safety hazard elimination and stabilizing the real estate market. Local measures include home purchase subsidies in Nanning and support for quality housing development in Chongqing, which includes increasing the supply of quality land and promoting the construction of high-quality residential projects [6][18]. Sales Trends - The transaction volume of new homes in 37 sample cities showed a year-on-year decline of 44.0% over the past four weeks, while second-hand homes in 17 cities decreased by 24.6%. Year-to-date, new home sales in 37 cities are down 15.0%, while second-hand homes are up 5.6% [7][19]. Key Focus Areas - The long-term alpha in the new home market is expected to be driven by quality properties, with companies that have advantages in inventory age, location, and brand likely to continue outperforming. The pressure from old inventory is anticipated to ease marginally as the volume of old stock decreases over time [8].

Investment Rating - The report maintains a "Positive" investment rating for the real estate industry [13]. Core Insights - The policy goal of stabilizing the market has somewhat boosted market expectations, but since April, marginal downward pressure has increased, leading to a higher probability of relaxed industrial policies. The rapid decline in industry volume and price may have passed, with structural highlights in core urban areas and quality properties. The current stock positions are not far from the bottom, providing room for rebound [3][7]. - The report emphasizes the importance of brand recognition and investment precision as key factors for success in the real estate sector. It suggests a "two-part" structured pricing approach for real estate companies, focusing on the proportion of old inventory and the strength of new land acquisitions [11]. Market Performance - The Yangtze River Real Estate Index decreased by 0.04% this week, with an excess return of +0.48% relative to the CSI 300. Year-to-date, the index has increased by 16.04%, with a relative excess return of -1.29% compared to the CSI 300 [8][17]. - The report notes mixed performance in the real estate sector this week, with development and property management companies showing varied results, while rental properties primarily declined [8]. Policy Updates - The Ministry of Housing and Urban-Rural Development reported achievements in high-quality development during the 14th Five-Year Plan, with approximately 5 billion square meters of new residential sales and over 11 million units of various types of affordable housing planned [9][19]. - Local regulations in cities like Chengdu and Shenzhen have been optimized to enhance housing standards and ensure safety in high-rise residential projects [9][19]. Sales Data - New home and second-hand home registrations in sample cities saw a significant year-on-year decline due to high base effects. The new home transaction area in 37 cities dropped by 20.5% year-on-year, while second-hand homes in 17 cities increased by 8.0% year-on-year [10][20]. - As of October 10, the new home transaction area in 37 cities for the month showed a year-on-year decrease of 40.0%, while second-hand homes saw a decline of 22.6% [10][20]. Investment Opportunities - The report identifies structural opportunities in the real estate market, particularly in core urban areas benefiting from price relaxation. It highlights companies with low inventory, strong product quality, and stable cash flows as key investment targets. Recommended stocks include Jianfa International for its low old inventory and high new product contribution, and Greentown China for its significant new product contributions despite some old inventory drag [3][11].