Citi has turned more constructive on the China property sector after its recent correction, expecting increased new launches after September to support sales improvement.

Overview

This report summarizes Citi’s China property conference, covering the views of 19 property developers and industry experts. The core conclusion is that although the market recently sold off due to an approximately 10% week-on-week decline in second-hand home transactions and tighter stock-market liquidity at month-end, and 1H26 results may be weak, Citi has become more constructive on the sector. Supporting factors include resilient transaction volumes, a low base after July 2025, more new launches from September, and a potentially supportive tone at the July Politburo meeting aimed at maintaining stability in the property market.

Core views

The report believes China’s physical property market will improve year on year in 2026, but a rapid reversal is unlikely. The bottoming cycle may extend through 2026–2030E, with core cities stabilizing first. Sales show structural divergence: luxury homes and low-end older small units are performing relatively well, while mid-market projects and projects built to older standards before 2H24 have weaker sell-through. On the land side, reduced supply in key cities has pushed up prices for quality plots; COLI, Jinmao, C&D and Greentown may wait for increased supply and more reasonable prices in 2H26 before accelerating land acquisitions. On earnings, the high base in 1H26 and margin pressure on inventory projects may cause significant profit declines at some companies, while CRL and Beike appear relatively more resilient.

Analysis framework

The report cross-checks feedback from participating developers, 5M26 contracted sales, land transactions, same-store sales growth, city research, expert interviews and valuation tables. The analysis focuses not on a single-company financial model, but on assessing the risk-reward profile of the China property sector in 2H26 across sales, land, earnings, recurring commercial property income, policy expectations and management changes.

Methodology notes

• sector cycle analysisThree-dimensional tracking of sales, land and earnings

  Identify turning points in developers’ fundamentals through contracted sales, land-acquisition pace and margin pressure.

  The report analyzes 5M26 sales growth, contracting land supply and 1H26 earnings pressure within a single framework, concluding that sales improvement and policy expectations support sentiment, although earnings downgrades may still cause short-term volatility.

• structural market analysisK-shaped divergence

  Performance diverges across cities, product tiers and project standards.

  Experts believe luxury homes and low-end older small units are outperforming mid-market projects. New-standard residential properties are more popular, while projects built to older standards before 2H24 face the greatest destocking pressure.

• valuation analysisComparison of NAV discounts, P/E, P/B and dividend yields

  Measure the relative attractiveness of property stocks using NAV discounts and valuation multiples.

  The valuation table lists the market capitalization, ratings, NAV discounts, target prices, P/E, P/B and dividend yields of multiple H-share and A-share developers as of June 26, 2026, for comparison of sector risk-reward.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• CRL / China Resources Land

  One of the preferred stocks; ranked first in the report

  Strengths

  Sales and land-acquisition performance remain strong, with 5M26 same-store sales up 10% year on year, recurring income up 8% year on year, and the Chengdu shopping-mall REIT spin-off expected to generate more than Rmb2bn in gains.

  Weaknesses

  Still exposed to overall sector valuation and sales volatility.

  Comparison

  Compared with COLI, Longfor and Poly, it faces less 1H26 high-base pressure; the report estimates that 1H26 earnings will decline by only approximately 10%.

  Risks

  If REIT disposal gains fall short, commercial-property same-store growth slows or policy support is insufficient, valuation recovery may be constrained.

• C&D int / C&D

  One of the preferred stocks; the report has become more positive

  Strengths

  Product upgrades, accelerated land acquisitions in Hangzhou and Suzhou in June, and expansion in Shenzhen.

  Weaknesses

  Land acquisitions had been slow before 5M26, and replenishment and sales execution in 2H26 still need to be validated.

  Comparison

  Citi ranks it after CRL among its July/August preferred stocks and emphasizes that its view is more positive than previously.

  Risks

  If the land market does not cool or new projects sell through below expectations, the improvement could be delayed.

• Beike

  One of the preferred stocks

  Strengths

  2Q GTV exceeded expectations, and the report estimates 26% year-on-year earnings growth.

  Weaknesses

  Highly sensitive to second-hand home transactions, homebuyer confidence and capital-market sentiment.

  Comparison

  Compared with developers, its earnings resilience comes more from transaction volumes and platform efficiency than from land reserves and project margins.

  Risks

  If second-hand home transactions weaken or policy expectations are disappointed, GTV growth may slow.

• Jinmao Group

  One of the preferred stocks

  Strengths

  5M26 sales grew more than 10% year on year, and land acquisitions are expected to accelerate in 2H26 as land supply recovers.

  Weaknesses

  1H25 profit accounted for a high proportion of FY25 profit, creating high-base and margin pressure in 1H26.

  Comparison

  Like COLI and C&D, it may wait for the 2H26 land window, but its earnings pressure is more pronounced than CRL’s.

  Risks

  The magnitude of earnings decline, land-acquisition prices and sales sell-through are the key uncertainties.

• COLI / China Overseas Land & Investment

  One of the preferred stocks

  Strengths

  5M26 sales grew more than 10% year on year, with core-city resources and a Buy rating.

  Weaknesses

  It contributed 68% of FY25 profit in 1H25, creating significant high-base pressure in 1H26.

  Comparison

  The report expects it, Jinmao, C&D and others to accelerate land acquisitions after land supply increases in 2H26, but its near-term earnings risk is higher than CRL’s.

  Risks

  The decline in 1H26 earnings, management changes and land replenishment prices could all affect market expectations.

• Longfor

  Covered name, rated Buy in Citi’s table

  Strengths

  Commercial-property same-store sales grew 9% year on year in 5M26, supported by tenant-mix adjustments and asset enhancement.

  Weaknesses

  The report expects it may post a loss in 1H26 due to margin pressure from inventory sales.

  Comparison

  Recurring commercial income is relatively strong, but pressure on development-business margins makes it less stable than CRL in the near term.

  Risks

  Inventory sell-through, gross-margin compression and the risk of turning loss-making.

Key data

• Number of participating developers19The report states at the beginning that 19 property companies participated in the Citi conference.
• Companies with sales growth above 10% in 5M26COLI、Jinmao、CRL、COGO、CMSKDespite fewer new launches, these companies achieved more than 10% year-on-year growth through improved sales of existing projects in core cities.
• Overall sector sales performance in 5M26Down 15% year on yearThe main reason was fewer new launches.
• Land supply in key citiesDown 32% year on year by gross floor area in 300 cities, at a 20-year lowReduced land supply pushed up prices for quality plots.
• Listed developers’ attributable land acquisitions in 5M26Down 48% year on yearThe report attributes this to reduced land supply in key cities.
• CRL and Longfor 5M26 same-store sales growthCRL +10% YoY; Longfor +9% YoYSupported by tenant-mix adjustments and asset enhancement initiatives.
• Estimated CRL REIT disposal gainsMore than Rmb2bnFrom the spin-off of the Chengdu shopping-mall REIT, which is expected to support 1H26 earnings.
• Beike earnings outlookExpected to grow 26% year on yearThe report states that Beike’s 2Q GTV exceeded expectations and estimates 26% year-on-year earnings growth.
• Changsha inventory22 months; approximately 7 years including landThe report expects Changsha home prices to remain near the bottom for an extended period, potentially for more than three years.
• Shenzhen second-hand listingsApproximately 100k units, of which 50% have been listed for more than one yearThe report believes that many long-standing listings are not from genuine sellers; luxury-home sell-through has slowed slightly but remains strong.

Impact & implications

From an investment perspective, the report believes the recent sector sell-off provides an opportunity to reassess quality developers. Near-term risks include declining 1H26 earnings, margin pressure and month-on-month transaction volatility. Over the medium term, the key issues are whether new launches after September materialize, whether core-city sales remain resilient, whether quality developers can replenish land reserves at reasonable prices after land supply recovers, and whether policy statements can stabilize market expectations.

Risks

• The decline in 1H26 earnings may exceed market expectations, particularly for developers facing high bases and significant margin pressure on inventory sales.
• If new launches after September fall short of expectations, the improvement in year-on-year sales may not continue.
• After land supply in core cities recovers, intense competition could push land prices higher and compress returns on replenishment by quality developers.
• Without substantive nationwide policy stimulus, supportive statements alone may be insufficient to reverse market confidence.
• K-shaped divergence may intensify, with destocking pressure on older-standard and mid-market projects weighing on margins.
• Tighter stock-market liquidity and month-on-month declines in second-hand home transactions may continue to cause sector valuation volatility.

What to watch

• Policy statements at the July Politburo meeting regarding stabilization of the property market.
• The pace of new launches and sell-through rates in core cities after September 2026.
• Land-acquisition pace and prices of COLI, Jinmao, C&D, Greentown and others in 2H26.
• Recognition of CRL’s REIT spin-off gains, recurring-income growth and commercial-property same-store sales performance.
• Whether Beike’s 2Q and subsequent GTV growth can continue.
• Changes in second-hand home prices, inventory and luxury-home sell-through in cities including Changsha and Shenzhen.
• The impact of Greentown’s new CEO and the change in COLI’s chairman on operating strategy.