Summary of China Property Industry Conference Call Industry Overview - The housing industry in China is expected to continue its downtrend in 2026, but with milder declines compared to previous years. The physical market may take longer to bottom out as restoring resident confidence becomes more challenging. However, quality alpha plays are anticipated to outperform negative industry beta [1][3][10]. Key Points Policy Stance - A reactive policy stance is likely to persist, with housing policy narratives in 2026 expected to mirror those of 2025. Risk mitigation will remain the top priority for regulators, with any fiscal-backed stimulus likely to be measured and implemented in the second half of the year to cushion home price declines [3][12][13]. Market Projections - The physical market may not bottom until 2027, with a high single-digit percentage year-on-year drop in primary sales volume and secondary home prices. New starts, completions, and real estate investment are projected to decline in the mid-teens percentage year-on-year [4][10]. Developer Performance - Developers are still facing challenges, with liquidity risk becoming less of a concern. However, industry margins may continue to decline due to lower home prices. State-owned enterprises (SOEs) with quality land banks may see pre-sales margins stabilize in 2026, while private-owned enterprises (POEs) will focus on project completion and deleveraging [5][10]. Investment Opportunities - There is expected to be a divergence in share prices between the overall industry and quality names with credible self-help stories. CR Land and Seazen A are favored as robust mall operators benefiting from policy tailwinds, while C&D and COLI are seen as consolidators in the residential market with optimized land banks supporting margins and earnings [6][10]. Additional Insights - The national primary residential inventory remains high at approximately 2.3 billion square meters, translating to an inventory level of 29.4 months. This includes 0.4 billion square meters of completed inventory, 1.6 billion square meters under construction, and 0.4 billion square meters of idle land [32][38]. - The sentiment among homeowners is deteriorating, with many willing to take losses on property sales. A significant percentage of respondents in tier 1 cities expect housing prices to fall further [30][34]. - Secondary home listings in major cities continue to rise, which may exert downward pressure on secondary home prices in 2026 [35][43]. Conclusion - The China property market is expected to face continued challenges in 2026, with a focus on risk mitigation rather than growth. While quality developers may find opportunities, the overall market sentiment remains weak, and the path to recovery may be prolonged.