CITIC SEC released a review report on the 2025 performance forecasts for the real estate sector on January 31, explicitly maintaining an "Outperform" rating for the sector.
The report indicates that although short-term sector performance is still affected by historical adjustments, the recovery trend of operating assets is significant. Multiple positive signals, including policy support and the expansion of the REITs market, are being released intensively. The real estate sector has established a foundation for stabilizing and halting the decline, with core asset values expected to be revalued.
Among the 78 A-share real estate companies that issued performance forecasts or preliminary statements, 58 announced anticipated losses. However, this outcome objectively reflects the market adjustments of the past few years. Positive signals for the sector continue to emerge: National Bureau of Statistics data confirms the market adjustment has entered a deep phase. By December 2025, the price indices for new homes and second-hand homes in 70 major cities had fallen 12.6% and 21.3% from their peaks, respectively, indicating an accelerated market clearing process. The volume of second-hand home listings in major cities is showing a downward trend, suggesting a gradual improvement in supply-demand dynamics. More crucially, a pivotal article published in the *Qiushi* journal emphasized that real estate policies should be sufficiently decisive upfront. This stance has effectively boosted homebuyer confidence, laying a solid foundation for shortening the market adjustment period and promoting sector stabilization.
The report stated, "Overall, the real estate market in 2026 has the foundation to stop declining and stabilize. Price stabilization is also key to the repair of real estate companies' balance sheets."
The report believes that the thickening value of high-quality assets and the rapid development of the REITs market are becoming important engines for sector repair. From January 29 to 30, 2026, eight commercial real estate REITs with a total valuation of 32.1 billion yuan were listed for issuance in a concentrated manner, with an expected fundraising scale of 31.5 billion yuan. These involve Cap Rates in the range of 4.3% to 7.2%, and their combined Net Operating Income (NOI) for 2025 reached 1.65 billion yuan.
CITIC SEC pointed out that the significant improvement in the efficiency of REITs market issuance and approval has accelerated the securitization process of high-quality assets. This not only effectively strengthens the balance sheets of real estate enterprises and alleviates debt burdens but also allows a broad range of investors to allocate high-quality, low-volatility equity assets and share in the dividends of China's economic growth.
The report further analyzes that the cash flow statements of China's household sector remain healthy, and the macroeconomy is trending upwards, providing solid support for the continuous repair of corporate operating cash flows. As policies vigorously push for the stabilization of residential prices, coupled with the appreciation of commercial real estate assets, the credit risk of major entities in the real estate sector has begun to recede. Particularly important is the fundamental shift occurring in the sector's financing structure, with financing cash inflows transitioning from being primarily based on corporate credit bonds to being dominated by project financing (such as REITs and property operating loans). This effectively alleviates the core contradiction of asset-liability mismatch in enterprises.
Based on the above assessment, CITIC SEC proposes an investment strategy centered on the theme of operating assets and the revaluation of China's core asset value. Development enterprises possessing core resources and operational capabilities will hold a significant advantage. The report specifically recommends companies such as China Resources Land, China Merchants Shekou, China Resources Mixc Lifestyle Services, Grandjoy Holdings, Seazen Holdings, Swire Properties, Hang Lung Properties, and Longfor Group. Under the expectation of a positive resonance between household and corporate balance sheets, the real estate sector is expected to bid farewell to the adjustment period and usher in a new phase of recovery, akin to "seeing a rainbow after the storm."