Investment Rating - The industry investment rating is "Outperform" and is maintained [2] Core Insights - The report emphasizes a continued "stabilizing expectations" policy from both central and local governments, with measures aimed at revitalizing idle land and housing while prohibiting their use for commodity housing construction [5] - Core city second-hand housing prices are showing improvement, indicating a recovery in confidence in the second-hand market, with better listing and negotiation conditions leading to an upward shift in transaction structures [5] Industry Fundamentals Tracking New Housing Transactions and Inventory - Last week, the new housing transaction area in 30 major cities was 123.24 million square meters, with a cumulative year-to-date transaction area of 870.59 million square meters, reflecting a year-on-year decrease of 3.6% [6] - The average transaction area over the past four weeks in these cities was 131.24 million square meters, down 18.5% year-on-year but up 0.8% month-on-month [6] - First-tier cities saw a significant year-on-year increase of 33.7% in average transaction area, while second-tier cities increased by 16.8% [6] Second-Hand Housing Transactions and Listings - In the last week, the second-hand housing transaction area in 20 cities was 221.16 million square meters, with a cumulative year-to-date area of 1,330.26 million square meters, showing a year-on-year increase of 27.8% [20] - The average transaction area over the past four weeks in these cities was 233.48 million square meters, also reflecting a year-on-year increase of 27.8% [22] Land Market Transactions - Last week, 100 major cities saw 23 new residential land supplies and 34 residential land transactions, with an average transaction price of 4,501 yuan per square meter and a premium rate of 2.21% [27] - The average transaction price for commercial land was 2,813.75 yuan per square meter, with a premium rate of 2.76% [27] Market Review - Last week, the A-share real estate index rose by 0.01%, outperforming the CSI 300 index, which fell by 1.33%, resulting in a relative outperformance of 1.34 percentage points [29] - In the Hong Kong market, the Hang Seng Property Services and Management Index fell by 0.78%, while the overall Hang Seng Index dropped by 3.22%, with the property services index outperforming the overall index by 2.44 percentage points [29]

Investment Rating - The report maintains an "Accumulate" rating for the real estate sector, indicating a potential investment return that exceeds the market benchmark index by 5% to 15% over the next 6-12 months [7]. Core Insights - As of early 2026, multiple regions have initiated old housing acquisitions, significantly accelerating the "old-for-new" program, supported by a reduction in the central bank's one-year relending rate from 1.5% to 1.25% [1][3]. - Local governments are actively engaging in funding through various means, including fiscal support and bank loans, to facilitate the acquisition and renovation of old housing, thereby enhancing the supply of affordable rental housing [3]. - The report highlights that the government's direct acquisition of second-hand old houses is an effective measure to streamline the housing exchange process, reduce the exchange cycle, and simplify procedures, ultimately promoting the sales of new homes [3]. Summary by Sections Section 1: Old Housing Acquisition - The "old-for-new" service has been launched in various cities, with Shanghai and Hangzhou being notable examples where initial registrations have been completed and dynamic waiting lists established for families wishing to participate [1][2]. - Specific focus areas include older properties in urban centers, with clear ownership and reasonable pricing, aimed at facilitating housing exchanges for those in need [2]. Section 2: Market Dynamics - By the end of 2025, public funds held a mere 0.43% of their stock investment value in the real estate sector, indicating a significant underweight compared to standard industry allocation [4]. - The report suggests that high-energy cities are likely to benefit from urban renewal initiatives, leading to structural optimization and gradual stabilization of the market [5]. Section 3: Investment Recommendations - The report recommends focusing on three main investment lines: 1. Real estate companies with strong credit advantages and high product reputation in core cities, such as China Merchants Shekou and China Jinmao [5]. 2. Public REITs with rich existing resources and strong operational brand competitiveness, such as China Resources Land and Shanghai Lingang [5]. 3. Long-term growth potential in property services, recommending companies like China Merchants Jiyu and Greentown Service [5].

Investment Rating - Investment recommendation: Outperform the market (maintained) [9] Core Viewpoints - The real estate sector continues to see low allocation, with leading real estate companies presenting good investment opportunities. The total market value of heavy holdings in the real estate sector among public funds was 25.67 billion yuan in Q2 2025, a decrease of 11.3% quarter-on-quarter, with a holding ratio of 0.83%, which is 0.37 percentage points lower than the industry standard [4][10][17]. Summary by Sections Industry: Fund Holdings Decline, Low Allocation Trend Continues - In Q2 2025, the total market value of heavy holdings in the real estate sector among sample funds was 25.67 billion yuan, down 11.3% quarter-on-quarter. The holding ratio was 0.83%, a decrease of 0.12 percentage points, indicating a relative underweight of 0.37 percentage points compared to the industry standard [10][17]. Sector: Development and Service Sectors See Decline - In Q2 2025, the heavy holding ratios for the real estate development and service sectors were 0.74% and 0.09%, respectively, both showing a quarter-on-quarter decline of 0.11 and 0.02 percentage points [11][22]. Individual Stocks: Focus on State-Owned Enterprises and Commercial Real Estate - The top five heavy holdings in the real estate development sector were Poly Developments (4.902 billion yuan), China Merchants Shekou (3.193 billion yuan), and others. Notably, New Town Holdings and China Resources Land saw increases in holdings of 466 million yuan and 202 million yuan, respectively [12][24]. Funds: Northbound Funds Increase Holdings in Poly, Southbound Funds Add to Beike, Longfor, and Greentown - In Q2 2025, the top five companies with increased northbound fund holdings included Poly Developments (+1.37 percentage points) and others. Southbound funds increased holdings in Beike-W (+2.15 percentage points) and Longfor Group (+2.04 percentage points) [13][35]. Investment Recommendations: Continue to Recommend Leading State-Owned Enterprises and Improvement-Oriented Real Estate Companies - The real estate sector's valuation remains at historical lows, with policies supporting market stabilization. The report suggests focusing on leading state-owned enterprises and improvement-oriented real estate companies with strong land acquisition capabilities and high-quality products, such as Jianfa International Group and Greentown China [14][38].