On August 28, a coordinated policy package was unveiled by multiple government bodies, spanning sales mechanisms, credit administration, and capital market fundraising. These measures form an integrated framework covering the entire property development chain from land acquisition to project delivery, aligning with the new development model for the real estate industry.

A key component of this package is the guideline issued by the China Securities Regulatory Commission (CSRC) titled "Opinions on Capital Market Support for Building a New Model for Real Estate Development." This document establishes a comprehensive support framework using tools such as equity refinancing for listed developers, mergers and acquisitions, bonds, asset-backed securities (ABS), real estate investment trusts (REITs), and private funds focused on real estate.

The most significant shift in this policy is the transition from financing models based on parent-company credit to those based on individual project viability. This change aims to treat all developers, regardless of ownership type, equally when it comes to reasonable financing needs. The message to mixed-ownership and private developers is clear: the focus is on the project's merits, not the owner's status. As long as a viable project exists, a financing channel is available.

For properties with clear ownership and closed-loop cash flows, project companies can access various capital market tools even if the parent developer group carries risk. As one industry insider summarized, existing bonds can be rolled over, but fresh funds are directed towards new projects, meaning developers must present quality projects to secure incremental capital.

Where the Changes Lie

Examining the suite of policies released on August 28 provides a clearer picture. Four significant documents were published that day. The Ministry of Housing and Urban-Rural Development, along with the Ministry of Natural Resources and the National Financial Regulatory Administration, jointly issued a notice on improving commercial housing sales systems. This notice promotes the adoption of sales for completed properties and strengthens oversight of presales.

Under the new sales rules, presales can only commence after the main structure of a single building is topped out. Down payments and mortgage funds from buyers must be fully supervised until the property is ready for delivery. Mortgage loans can only be disbursed into the supervised account after the project has been registered as completed, meaning developers cannot access sales proceeds before project completion.

This delay in sales revenue increases developers' reliance on external financing, necessitating immediate reforms to the financing system. On the same day, the People's Bank of China, the National Financial Regulatory Administration, and the CSRC issued synchronized documents to coordinate policy efforts.

The financial support now covers both ends of the spectrum: land acquisition and development, as well as sales. During the land acquisition phase, developers must use their own funds, with bank loans prohibited. However, they are now allowed to pay land premiums in installments to ease cash flow pressures. During the development phase, banks can provide construction loans, and capital markets can support bond issuance, ABS, private placements, mergers, and REITs.

On the sales end, the maximum term for housing loans has been extended from 30 to 40 years, encouraging households to leverage and support demand. The disbursement point for housing loans has been moved from project launch or structural completion to after sales registration or project completion, ensuring a "cash for keys" arrangement.

The CSRC's opinion acts as a guiding document for all capital market activities related to real estate. It clarifies financing rules across five markets: equities, bonds, ABS, REITs, and private funds. The overarching goal is to reform development financing by shifting from a reliance on parent-company credit to evaluating project-specific conditions.

Equity refinancing is now supported for listed developers through private placements and convertible bonds to specific investors, with proceeds directed towards qualifying market-oriented projects. The funds cannot be used to repay old debts or acquire land. For mergers and acquisitions, listed developers can use share issuances, convertible bonds, or cash to acquire property-related assets. When purchasing assets with shares or convertibles, they can raise matching funds for eligible projects or transaction consideration, opening a channel for stronger developers to expand and for distressed assets to be restructured.

These policy benefits extend to companies in closely related sectors, such as construction, which can also refer to the same rules for their financing activities. On the bond front, developers can now issue new corporate bonds for qualifying projects, a departure from the long-standing practice of refinancing existing debt. Existing bonds can also be rolled over to ease short-term repayment pressures. Regulators encourage professional institutions to support bond issuance through guarantees or credit enhancement tools.

For CMBS, ABS, and REITs, the policy encourages issuing commercial mortgage-backed securities and ABS backed by projects with stable cash flows. REITs can be launched for eligible rental housing or urban renewal projects, or such assets can be injected into existing listed REITs as expansion capital. Conditions for originators of rental housing REITs and net cash flow distribution requirements may be optimized. The development of commercial property REITs will be advanced prudently.

Private funds for real estate are also supported, allowing qualifying managers to establish vehicles that attract institutional capital for investment in qualifying property projects. In June, the first four commercial property REITs were listed on the Shanghai Stock Exchange, raising over 20 billion yuan. Currently, seven more products have been approved for issuance, with another sixteen under review, potentially raising a combined total exceeding 85 billion yuan.

The fact that commercial property REITs moved from initial listing to inclusion in top-level policy documents in just over two months signals that the closed-loop process for existing commercial properties is accelerating. The new financing rules are steering the real estate financing system away from a bank-credit-dominated model towards one led by a multi-tiered capital market.

Bridging the Gap Between Policy and Practice

The new rules hold significant practical value in the short term. They can isolate debt risks at the group level, ensuring that quality projects still receive funding. This helps safeguard the bottom line for project delivery and prevents risks at the corporate level from cascading down to individual developments.

However, some developers see long-term limitations in a purely project-centric financing model. One financing executive noted that a company's management capabilities, risk controls, and product design directly determine a project's success. Relying solely on static project metrics may not provide a full picture of future risks. When the comprehensive operational strengths built over years cannot be converted into financing credibility, the industry's brand value and product expertise are significantly devalued, which some view as a step backward.

A larger contradiction lies in the gap between policy text and implementation at the grassroots level. Old evaluation habits persist in practice. Financial institutions have long equated land acquisition scale and land reserves with corporate creditworthiness. Executives question whether a company that acquires more or better land is automatically more creditworthy, more capable, or produces higher quality products. This outdated metric, they argue, no longer aligns with the industry's transformation toward high-quality development.

Financing chiefs from private developers describe a common industry dilemma. While policy documents are comprehensive and regulators express positive intentions, actual capital deployment remains arduous. The bank lending system's lifetime accountability for loans remains unchanged, prompting frontline risk officers to lean toward caution and reluctance to lend. Whether it's acquisition financing or development loans, banks are hesitant, leaving developers frustrated. Some companies even face loan non-renewals or forced early repayments, even for projects with reasonable qualifications.

Capital market tools also confront practical constraints. While channels for equity refinancing, bonds, private funds, and REITs are now open, these institutional openings do not guarantee automatic capital inflows. Institutional investors follow market-based risk judgment. With the industry's recovery foundation not yet solid, insurers, state-backed funds, and private institutions tend toward conservative risk appetites.

New operational models such as asset revitalization, management-led construction, and fund-based management are still mostly in pilot phases. They have not developed into replicable, scaled sources of sustainable income. The pace of business expansion and project implementation heavily depends on external investors' willingness and financial strength, creating significant uncertainty.

The policy dividends are unevenly distributed among different types of developers. For financially stable state-owned enterprises and quality private developers, the new rules broaden access to refinancing, M&A, and asset securitization. These tools can be used to fund land acquisition and development, revitalize existing held assets, and support a transition toward asset operation models.

For developers currently in distress resolution, however, historical debts at the group level fall outside the policy's scope. These companies cannot rely on the new measures to resolve their existing burdens. They can only seek financing support for individual qualifying projects. Industry analysts believe that while the capital market opinion establishes the necessary institutional framework, its effective implementation requires coordinated supporting mechanisms. The deployment of capital market tools still requires genuine participation from institutional funds. Similarly, the assessment and accountability systems for credit need optimization. Otherwise, policy documents alone cannot bridge the final mile of capital deployment.