Core Viewpoint - The recent meeting of the Political Bureau emphasizes the need to stabilize the real estate market and accelerate urban renewal, with a focus on high-quality housing supply and optimizing existing property acquisition policies [1][2][10]. Group 1: Urban Renewal and Housing Supply - The meeting highlights the acceleration of urban renewal actions, particularly in transforming urban villages and dilapidated housing, aiming to stimulate demand through existing stock [2][3]. - The introduction of "high-quality housing supply" marks a significant shift in policy direction, aligning with the goal of constructing "good houses" by 2025, which will guide the transformation of the real estate sector [4][10]. - The strategy of leveraging existing stock to drive new demand is expected to alleviate high inventory pressures, with an estimated 2 billion square meters of property to be absorbed through urban renewal initiatives [3][5]. Group 2: Policy Optimization and Market Stability - The focus on optimizing existing property acquisition policies is seen as a core engine for stabilizing the market, with plans to convert existing properties into affordable housing [5][10]. - The real estate market is currently in an "L" shaped bottoming phase, necessitating continued efforts to stabilize and recover the market, with future policies being crucial [2][9]. - The meeting reiterates the importance of maintaining a stable market environment, with a combination of policy measures aimed at both supply and demand sides to support housing needs [10][11]. Group 3: Future Policy Directions - The 2025 real estate policy is expected to focus on three main goals: stabilizing expectations, preventing risks, and promoting transformation, with four key areas of emphasis [10][11]. - Policies will aim to enhance the quality of housing, support urban renewal, and ensure financial backing for real estate projects, particularly in major cities [10][11]. - The integration of financial support mechanisms and risk prevention strategies will be crucial in maintaining market stability and encouraging high-quality development in the sector [11].

Investment Rating - The report maintains an "Overweight" rating for the real estate development and services sectors [6]. Core Insights - The recent political bureau meeting emphasized the need to "continuously consolidate the stability of the real estate market," focusing on urban village renovations, high-quality housing, and stock housing acquisition [2][4]. - The report indicates that the incremental policy window for the real estate industry is gradually opening, with a more proactive macroeconomic and fiscal policy environment expected to support market recovery, particularly in first-tier cities [2][3]. - The report highlights a significant year-on-year increase in transaction volume, with new and second-hand housing sales in 19 key cities rising by 18% in Q1 2025, indicating a positive trend in market stabilization [3]. Summary by Sections Policy Direction - The meeting's focus on urban renewal, stock housing acquisition, and high-quality housing supply aligns with previous predictions regarding the incremental policy window [4]. - The emphasis on urban renewal actions and the acceleration of urban village and dilapidated housing renovations signal strong governmental support for these initiatives [4]. Market Recovery - The report notes that while the market has shown signs of stabilization, particularly in sales volume, the foundation for price stability remains fragile, necessitating ongoing policy support [3]. - The report suggests that first-tier cities will exhibit greater policy elasticity, which could lead to a more pronounced recovery in the market and related stocks [2][5]. Investment Recommendations - The report recommends a focus on real estate stocks characterized by "good credit, good cities, and good products," particularly in first-tier cities [5]. - Specific stock recommendations include: - A-share developers: Chengdu Investment Holdings, Chengjian Development, Binjiang Group, New Town Holdings, China Merchants Shekou, and Jianfa Co [5][9]. - Hong Kong-listed developers: China Resources Land, China Overseas Development, Greentown China, Jianfa International Group, and Yuexiu Property [5][9]. - Property management companies: China Resources Vientiane Life, Greentown Service, China Overseas Property, Poly Property, China Merchants Jiyu, and Binjiang Service [5][9].