Citi pointed out in its latest research report that in November 2024, data from China's National Bureau of Statistics indicated that the completion area in the Real Estate market had increased, but Real Estate Investment had declined, with new starts still weak, and the decline in housing prices had diminished. Specifically, the completion area in November fell 39% year-on-year, the largest drop this year, partly due to delays caused by the pandemic at the end of 2023; new starts fell 26.8% year-on-year; housing prices in both the primary and secondary markets in 70 cities decreased, but the decline narrowed; sales increased by 1.4% year-on-year, while Real Estate Investment fell 11.6% year-on-year.
Citi is generally cautious about the overall Real Estate Industry in China, expecting that between 2025 and 2027, the Real Estate market will undergo a destocking cycle, with prices expected to stabilize, but Real Estate Investment is anticipated to continue declining. With new starts and land sales hitting record lows since 2005, the new housing market size may further decline, negatively impacting downstream construction and completions. Citi emphasizes that the stability of policies and support from the demand side are crucial for the recovery of the Real Estate market.
Citi expects that with the gradual implementation of policies and the accelerated execution of new policies by local governments, some cities' Real Estate markets will show signs of short-term recovery. For example, the implementation of new policies in Hangzhou, Hefei, Guangzhou, and Foshan has begun to accelerate. Citi has adjusted the ratings and Target Prices for some companies, such as setting a Target Price of HK$6.00 for COUNTRY GARDEN (02007) with a rating of "Hold"; for CHINA OVERSEAS (00688), the Target Price is set at HK$32.70 with a rating of "Hold"; and for CHINA RES LAND (01109), the Target Price is set at HK$2.00 with a rating of "Sell."