Guolian Minsheng Securities: There may be incremental measures implemented in real estate policies, continuously recommending improved real estate companies

According to the Zhitong Finance APP, Guolian Minsheng Securities released a research report stating that with the implementation of the U.S. "reciprocal tariffs," domestic demand in real estate may receive policy support. As the U.S. tariff policy takes effect, real estate, as an important pillar industry for stabilizing domestic demand, may see incremental policy measures implemented. It continues to recommend high-quality real estate companies that acquire land in core urban areas of core cities. For the industry, real estate, as an important support for domestic demand, is expected to benefit from the liquidity released by future reserve requirement ratio cuts and interest rate reductions. At the same time, core cities still have room for policy easing adjustments, promoting a stabilization in the real estate market. For real estate companies, those that pursue safety and profitability and can continuously acquire land in core urban areas may be the first to emerge from the industry's low point.

The main viewpoints of Guolian Minsheng Securities are as follows:

Industry Events

On April 8, 2025, the General Office of the Ministry of Finance and the General Office of the Ministry of Housing and Urban-Rural Development issued a notice to carry out the 2025 annual central financial support for urban renewal actions, with the central government providing fixed subsidies to selected cities. On the same day, People's Finance reported that several first-tier cities are studying and reserving policies and measures to further stabilize the real estate market. With the implementation of the U.S. "reciprocal tariffs," domestic demand in real estate may receive policy support. As the U.S. tariff policy takes effect, real estate, as an important pillar industry for stabilizing domestic demand, may see incremental policy measures implemented.

On April 6, the People's Daily stated in "Concentrate on Doing Our Own Things Well to Enhance Confidence in Effectively Responding to U.S. Tariff Impacts" that monetary policy tools such as reserve requirement ratio cuts and interest rate reductions have ample room for adjustment and can be implemented at any time. Reserve requirement ratio cuts and interest rate reductions will release liquidity, and real estate, as a reservoir of funds, is expected to benefit, with mortgage rates potentially further decreasing, lowering the costs of purchasing and holding properties. At the same time, declining interest rates may lower the yield threshold for policies such as urban village renovations and land acquisitions, improving supply-demand structures and promoting stabilization in the real estate market.

New Housing Market Divergence Continues, Policy Easing Expected in Peripheral Areas of Core Cities

The current real estate market is diverging, with new housing improvement projects in core areas experiencing price increases and good sales, while price reductions and sales in peripheral areas are also challenging, primarily due to inventory divergence. For example, by the end of 2024, the citywide inventory turnover period in Shanghai is 14 months, within the outer ring is 8-10 months, while outside the suburban ring exceeds 24 months. During the three years from 2022 to 2024, most cities have lifted restrictive measures related to real estate, with Beijing, Shanghai, Shenzhen, and Hainan still having purchase restrictions; future policies in core cities are expected to primarily ease in peripheral areas. Other cities may shift from restrictions to support, such as Nanjing announcing on March 31 the complete cancellation of sales restrictions and introducing measures like "old-for-new" exchanges and government subsidies to promote demand release.

Increased Enthusiasm for Land Auctions, Safety Nets and Profit Margins Coexist in Core Area Projects

Recently, high-priced land transactions have frequently occurred in cities like Shanghai, Hangzhou, and Chengdu, with Hangzhou (88,000 yuan/sqm) and Chengdu (41,000 yuan/sqm) setting new records for unit price land kings, primarily due to the good performance of the core area market in core cities, improving cash flow for real estate companies and increasing their willingness to acquire land; the government is actively releasing well-located and moderately sized plots, lifting new housing price limits and opening up breakthrough spaces. In the context of lifted price limits, product quality becomes paramount, and real estate companies can obtain premium space through product strength, with good product quality supporting their land acquisition efforts Investment Advice

We continue to recommend high-quality real estate companies that acquire land in core areas of core cities. As an important support for domestic demand, the real estate sector is expected to benefit from the liquidity released by future reserve requirement ratio cuts and interest rate reductions. At the same time, there is still room for policy easing adjustments in core cities, which will help stabilize the real estate market. For real estate companies, those that pursue safety and profitability and can continuously acquire land in core areas of core cities may be the first to emerge from the industry's low point.

In terms of targets, we recommend real estate companies that focus on improving products, layout in core first- and second-tier cities, and have a safe and stable financial structure, such as Greentown China (03900), CIFI Holdings (01908), Binjiang Group (002244.SZ), and China Overseas Land & Investment (00688); the property management sector's dividend attributes are enhanced, highlighting investment value; we recommend leading property management companies with high dividends and high yields, scale advantages, and high operational efficiency, such as CHINA RES MIXC (01209) and ONEWO (02602).

Risk Warning

Policy effects may not meet expectations; liquidity risks for real estate companies may increase; market confidence may fall short of expectations