Investment Rating - The report maintains a "Positive" outlook for the real estate industry [6] Core Insights - The recent policy adjustments in Beijing and Shanghai align with expectations and are moderate in intensity, which will aid in regional inventory digestion. This series of "city-specific policies" strengthens confidence in the industry's long-term recovery path [1][4] - The recovery of real estate stocks does not solely depend on the timing of policy implementations; rather, the decline in risk-free interest rates and the reduction in industry risk assessments are the primary drivers of this recovery. The market has entered a new bottoming phase, where the impact of the denominator (risk-free rates) outweighs that of the numerator (real estate prices) [2] - The new policies in Shanghai, including the relaxation of purchase restrictions and adjustments to mortgage rates, are expected to stimulate demand in suburban areas, which will help reduce inventory [3] Summary by Sections Policy Developments - On August 25, Shanghai announced new housing policies, including easing purchase restrictions outside the outer ring and enhancing public housing fund support. The adjustments are expected to significantly impact the new housing market, particularly in suburban areas [3] - The report notes that the new policies are similar to those in Beijing, focusing on optimizing public housing fund policies and adjusting commercial loan rates to lower housing costs [3] Market Trends - Since Q2 of this year, the new housing market has shown signs of weakening in both volume and price, increasing the pressure for stabilization. The recent policies from Beijing and Shanghai have reinforced confidence in the industry's long-term recovery, with further policy space anticipated [4] Investment Recommendations - The report suggests focusing on specific stocks: China Merchants Shekou (001979, Buy), Poly Developments (600048, Buy), Beike-W (02423, Buy), Longfor Group (00960, Buy), and Gemdale Corporation (600383, Hold) [5]

Core Viewpoint - The real estate market is in a recovery phase, supported by ongoing policy efforts to stabilize sales and funding, with expectations for a bottoming out of the industry [1][2]. Sales Data - In the first seven months of 2025, the sales area of commercial housing was 51,560 million square meters, with sales revenue of 49,566 billion yuan. Although sales data remains low, the "stop decline and stabilize" policy continues, and core cities are optimizing purchasing policies, which is expected to restore market confidence [1]. - The sales area decreased by 4.0% year-on-year, and sales revenue fell by 6.5% year-on-year, indicating a slight decline in July due to seasonal factors [2]. Investment Trends - Real estate investment in the first seven months of 2025 decreased by 12.0% year-on-year, with new construction area down by 19.4% year-on-year and completion area down by 16.5% year-on-year. Despite a slight recovery in new construction, the overall trend remains negative, reflecting weak market demand [3]. - The willingness to acquire land and start new projects remains low, with expectations that new construction growth will be difficult to strengthen in the short term [3]. Funding Situation - The funds available to real estate developers decreased by 7.5% year-on-year in the first seven months of 2025. However, with the central government's commitment to address real estate risks and improve financing conditions, there is potential for gradual improvement in funding availability [4]. - Specific funding sources showed mixed results, with domestic loans and foreign investment increasing, while self-raised funds and personal mortgage loans declined significantly [4].

Investment Rating - The industry investment rating is "Outperform the Market" with an expected relative increase of over 10% in the industry index compared to the broader market within the next six months [4][8]. Core Insights - The real estate industry investment has weakened in April, with construction starts and completions remaining at low levels. Sales are expected to experience a seasonal decline, indicating a bottoming phase that requires ongoing monitoring of future trends. A series of financial policies continue to support the industry's recovery, with domestic loan funding turning positive year-on-year from January to April. Policies such as interest rate cuts and financing support are expected to improve the industry's financial situation [1][2][5]. Summary by Sections Investment - The investment sector has seen a more significant decline, with real estate development investment down by 10.3% year-on-year from January to April 2025, a decrease of 0.4 percentage points compared to previous values. The investment growth rate for April alone fell by 11.5%, widening the decline by 1.2 percentage points from March. The industry continues to deplete inventory, and factors such as sales and funding challenges hinder the replenishment of inventory, leading to a weak investment outlook in the short term [2]. Land - Core cities remain the primary investment areas, with land transactions in 100 cities showing a recovery. From January to April, the total transaction price of land in these cities increased by 8.8% year-on-year, while the planned construction area decreased by 10.1%. In April, both the planned construction area and total transaction price saw a month-on-month increase, with a land transaction premium rate of 9.7%, maintaining a relatively high level for the year [2]. Construction Starts and Completions - New construction starts and completions remain low. From January to April, the area of new construction started decreased by 23.8% year-on-year, with a slight narrowing of the decline by 0.6 percentage points compared to Q1. In April, the monthly decline was 22.3%, widening by 3.5 percentage points from the previous month. The completion sector is expected to remain under pressure due to declining sales and new construction, with a year-on-year decrease of 16.9% from January to April and a significant drop of 28.2% in April alone [2]. Sales - The sales sector experienced a seasonal decline month-on-month, with year-on-year changes of -2.8% in sales area and -3.2% in sales amount from January to April. The sales price also saw a slight year-on-year decrease of 0.3%, with a more pronounced drop of 4.3% in April compared to the same month last year [3]. Funding - Under policy support, the growth rate of domestic loans has turned positive. From January to April, the sources of funds saw a year-on-year decline of 4.1%, with domestic loans increasing by 0.8%, while self-raised funds, deposits, and personal mortgages saw declines of 6.8%, 3.0%, and 8.5% respectively [7].