CITIC Securities: Optimistic about real estate companies that have competitive advantages in core sectors, moderate leverage ratios and scale, and strong brand influence, as well as real estate brokerage firms

CITIC Construction Investment is optimistic about real estate companies that have competitive advantages in core sectors, moderate leverage and scale, and brand influence, as well as intermediary firms. In the short term, under policy stimulation, Shanghai’s second-hand home transactions have rebounded, helping stabilize the volume and prices in the real estate market. In the long term, Chinese real estate companies will continue to shift their focus toward operational businesses, and the imbalance in housing structures in core cities still creates development opportunities for development businesses.

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CITIC Construction Investment: Review of Real Estate Data from the National Bureau of Statistics for January-February 2026

Since the beginning of the year, indicators such as new home sales and commencement and completion of projects have continued to face pressure. In January-February, the year-on-year declines in sales area, sales amount, started construction area, and completed area have widened compared to the previous year, while the decline in development investment has narrowed. Since the start of the year, the performance of first- and second-hand property transactions has diverged. In February, second-hand home prices in Beijing and Shanghai increased month-on-month. Since March, the effects of the “Seven Policies in Shanghai” have become evident, with signs of stabilization in Shanghai’s housing market. The heat of second-hand home transactions continues to rise, with Shanghai’s second-hand home transactions reaching 7,233 units in the past week, a new high since 2021.

The National Bureau of Statistics released the real estate market operation data for January-February 2026. During this period, the national real estate sales area, investment, new construction area, and completed area were 92.93 million square meters, 961.2 billion yuan, 50.84 million square meters, and 63.2 million square meters, respectively, with year-on-year declines of 13.5%, 11.1%, 23.1%, and 27.9%. The decline rates are wider than the full-year 2025, which saw decreases of 6.7 percentage points, an increase of 6.1 percentage points, 2.7 percentage points, and 9.8 percentage points, respectively.

National sales remain under pressure, but second-hand home prices in Beijing and Shanghai increased month-on-month. From January to February, the national commercial housing sales area decreased by 13.5% year-on-year, a wider decline than the full year of 2025 by 6.7 percentage points. There has been some divergence between first- and second-hand markets. The price indices for new and second-hand residential properties in 70 large and medium-sized cities nationwide declined less in February, with second-hand home prices in Beijing and Shanghai rising by 0.3% and 0.2% month-on-month, respectively. The effects of Shanghai’s “Seven Policies” continue to show, with second-hand home transactions in March further warming, reaching 7,233 units in the past week, a new high since 2021.

The land market in core cities is heating up, but new construction and completion still need recovery. In January-February, real estate development investment decreased by 11.1% year-on-year, narrowing the decline by 6.1 percentage points compared to 2025. Driven by major land parcels in Guangzhou, land acquisition enthusiasm in first-tier cities has rebounded, with land transfer premiums reaching 19%. However, new construction area decreased by 23.1%, and completed area decreased by 27.9% year-on-year, facing significant downward pressure.

We are optimistic about real estate companies that are competitive in core sectors, with moderate leverage and scale, and strong brand effects, as well as intermediary firms. In the short term, policy stimuli have helped Shanghai’s second-hand home transactions rebound, stabilizing the market’s volume and prices. In the long term, Chinese real estate companies will continue to shift their focus toward operational businesses, and the imbalance in housing structures in core cities will still create development opportunities for development businesses.

(Source: People’s Financial News)