Beijing’s property-market policy eased moderately ahead of peak season, reinforcing the logic of a gradual sector recovery

Overview

This report assesses the impact of Beijing’s latest easing of housing purchase restrictions on China real estate sales, market sentiment and listed developers’ valuations, and provides a framework for monitoring the 1H26 results season. HSBC believes the adjustment is moderate in scale but well timed, supporting transaction momentum ahead of the traditional peak sales season. A full sector recovery will still take time, but policy support, recovery in core cities and resilient high-end residential demand are conducive to gradual improvement in fundamentals and valuations.

Core views

First, Beijing shortened the required social-security or personal income tax payment period for non-local households buying homes within the Fifth Ring Road from two years to one year, lowering the purchase threshold and releasing some pent-up demand. Second, local policies are more likely to maintain sales momentum through moderate, targeted measures rather than relying on large-scale stimulus, with policy mainly serving to stabilize expectations and safeguard recovery. Third, 2026 may still involve concentrated digestion of legacy land banks and impairment pressure, creating a cleaner base for earnings recovery from 2027 onward. Fourth, during the results season, investors should focus on margins of unbooked projects, high-end residential sales and pricing power, rather than only looking at current-period profit declines. Fifth, offshore capital’s interest in the sector is recovering, with developers that have higher residential exposure, prominent core-city presence and stronger earnings visibility more favored.

Analysis framework

The report combines policy event analysis, judgment on sales seasonality, developers’ Beijing land-bank exposure, management earnings guidance, offshore investor feedback and relative valuation. Stock target prices mainly use a net asset value discount method, adding together the gross asset value of development projects and investment properties, deducting net debt, and applying a target discount based on operating quality, financial strength and historical execution capability.

Methodology notes

• Policy and cycle analysisPolicy timing and sales seasonality framework

  Assess whether policy easing can release pent-up demand and stabilize market expectations ahead of the traditional peak season.

  Beijing’s policy was introduced after the summer lull and before the “Golden September and Silver October” season, so even with limited easing, it may provide strong marginal support to short-term transactions and homebuyer confidence.

• Earnings quality analysisUnbooked sales margin framework

  Use unbooked sales and pre-sale projects to judge the speed and magnitude of future margin recovery.

  Legacy high-cost land banks will continue to weigh on 2026 reported profits; the implied margins of unbooked projects better reflect future earnings trends than current-period profits.

• Valuation analysisNet asset value discount method

  Derive net asset value per share by deducting net debt from the total asset value of development projects and investment properties, then applying a target discount.

  The target discount is determined on a relative basis according to a company’s sales momentum, recurring income, margin outlook, financial strength, inventory risk and historical execution capability.

Asset mapping & comparison

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

• CR Land (1109.HK)

  Top beneficiary pick, maintain Buy

  Strengths

  Leading high-end projects, relatively high core-city exposure, strong sales momentum, stable recurring income and a relatively clear margin recovery path.

  Weaknesses

  Commercial and shopping-mall businesses create some retail-property exposure, and the share price has already significantly outperformed year to date.

  Comparison

  Compared with most covered developers, it has stronger earnings visibility, execution track record and asset quality, and is expected to benefit earlier from market recovery.

  Risks

  Sales momentum fails to sustain, margins fall short of expectations, shopping-mall business slows significantly, dividend stability declines, and macro or real estate policy uncertainty.

• C&D International (1908.HK)

  Top beneficiary pick, maintain Buy

  Strengths

  Prominent competitiveness in high-end residential, younger land bank supporting margin recovery, and the highest potential upside implied by the target price among the three key names.

  Weaknesses

  Net gearing and project cooperation risks require continued monitoring, and share-price performance may be affected by financing activities.

  Comparison

  Compared with developers with more legacy low-margin land banks, its younger land bank and margin recovery prospects constitute differentiated advantages.

  Risks

  Land acquisitions slow, sales deteriorate sharply, margins compress significantly, deeply discounted share placements, joint-venture project risks and policy uncertainty.

• COLI (0688.HK)

  Direct beneficiary of Beijing policy, maintain Buy

  Strengths

  Significant Beijing exposure, with central-SOE background, core-city presence and strong participation in sector recovery.

  Weaknesses

  Inventory impairment risk continues to weigh on valuation, and there is uncertainty around margins and booking pace.

  Comparison

  Compared with developers with lower Beijing exposure, it has higher policy sensitivity; however, the net asset value discount is set relatively conservatively to reflect inventory impairment concerns.

  Risks

  Sales slow, margins fall short of expectations, booking pace declines, material impairment losses, and macro and real estate policy uncertainty.

Key data

• Beijing home-purchase eligibility adjustmentThe required social-security or personal income tax payment period for buying homes within the Fifth Ring Road was shortened from two years to one yearApplicable to non-local households; the policy was introduced from 7 August 2026.
• CR Land (1109.HK)Current price HKD32.82; target price HKD43.80; potential upside 33.5%Maintain Buy; estimated net asset value per share of HKD55.50, applying a 21% target discount.
• C&D International (1908.HK)Current price HKD14.60; target price HKD19.90; potential upside 36.3%Maintain Buy; estimated net asset value per share of HKD42.40, applying a 53% target discount.
• COLI (0688.HK)Current price HKD13.14; target price HKD16.50; potential upside 25.6%Maintain Buy; estimated net asset value per share of HKD25.70, applying a 36% target discount.
• Share-price performance from the beginning of 2026 to 7 AugustCR Land rose 21%, COLI rose 7%, and C&D International fell 7%Over the same period, the HSI performance was about 0%, and covered developers declined by an average of 14%.
• Sector earnings inflection-point assessment2026 will continue to digest legacy issues, with a clearer foundation for earnings recovery from 2027 onwardNear-term profits remain weighed down by legacy land banks, impairments and booking of low-margin projects.

Impact & implications

Beijing’s policy is expected to directly improve project visits, sell-through and pricing expectations in the local market, and create a demonstration effect for other tier-one cities. Near-term beneficiaries are mainly developers with higher exposure to Beijing and core cities, a larger share of residential business and strong competitiveness in high-end projects. In the medium term, sales stabilization can ease cash-flow pressure, enhance land-investment capability and gradually shift market attention from historical impairments to margins and earnings recovery. Further valuation upside still depends on whether sales recovery can be sustained, whether margins materialize and whether sector fundamentals can cross the current valuation threshold.

Risks

• Policy easing in Beijing and other cities may be weaker than expected or less effective in implementation, resulting in limited release of pent-up demand.
• Sales improvement during the “Golden September and Silver October” season may not be sustainable, and sector recovery may weaken again.
• Legacy high-cost land banks, inventory impairments and booking of low-margin projects may cause margin recovery to be slower than expected.
• Demand for high-end residential or pricing power may decline, affecting key developers’ sales and earnings visibility.
• Macroeconomic conditions, household income and home-price expectations may continue to weaken, suppressing homebuyer confidence.
• Highly leveraged developers face liquidity, financing and reinvestment constraints.
• Slowing operations in commercial real estate and retail properties may drag on developers with relevant exposure.
• After share-price gains, offshore capital may reduce allocation willingness due to valuation constraints.

What to watch

• New-home and secondary-home transactions, project visits and sell-through rates after Beijing’s policy implementation.
• Whether other tier-one cities continue to introduce similar targeted easing measures.
• Margins implied by unbooked sales and pre-sale projects in 1H26.
• Resilience of high-end residential sales and pricing power for high-land-cost projects.
• Developers’ guidance on 2027 earnings recovery, impairments and digestion of legacy land banks.
• Offshore investor fund flows and changes in preferences for residential development versus retail-property exposure.
• Changes in sales momentum, land investment and balance sheets of CR Land, C&D International and COLI.