Investment Value Assessment and Analysis of China's Real Estate Market

Based on the latest market information I have collected, I will provide you with a comprehensive analysis of the investment value assessment of China’s real estate market.

According to the latest market data, China’s real estate market has indeed undergone significant adjustments. From a macro perspective,

, indicating a significant change in the decision-makers’ ranking of key tasks in the real estate sector [1]. Compared with previous years, the position of real estate in policy priorities has clearly declined.

: As once one of China’s most stable developers, Vanke’s recent move to seek bond extensions has triggered a new round of concerns about the entire industry. Vanke currently faces over $50 billion in interest-bearing debt, about 45% of which is unsecured, including approximately RMB 13.4 billion in domestic bonds that need to mature or be redeemed by the end of June 2025 [2].

Although search results show more information on international housing prices, the adjustment trend can be seen from Hong Kong market data. The number of unsold first-hand units in Hong Kong has dropped to 18,889, a 29-month low. Compared with the high in January this year, inventory has decreased by more than 4,200 units, a drop of about 18.3% [3]. This reflects the effectiveness of the “price for volume” strategy.

Regarding the view that “rental yield exceeds 4%”, a specific analysis needs to be combined with the current market environment:

:

• The significant correction in housing prices has indeed increased the attractiveness of rental yields
• Compared with bank deposit interest rates, a 4% rental yield is indeed competitive to some extent
• In an environment of relatively low loan costs, positive cash flow investment becomes possible

:

• In some areas with high supply, due to the concentrated occupancy of new properties, rental competition is fierce, and rents may be under pressure [3]
• Rising vacancy rates may affect actual rental income
• Expenses such as property maintenance costs and taxes need to be included in comprehensive calculations

: Currently, the interest rate of US dollar fixed deposits is relatively high, but the return is still lower than that of stocks and bonds; its advantage lies in stability [4]. Compared with bank deposits, real estate has potential for capital appreciation, but it has poor liquidity and high thresholds.

: HSBC Private Banking holds a positive view on Hong Kong stocks, predicting that the Hang Seng Index will reach a target of 31,000 points by the end of 2026 [4]. In contrast, real estate has different risk characteristics and is more affected by policies and supply-demand fundamentals.

: Morgan Stanley has turned its attention to Ping An of China, which has been dragged down by real estate risks, believing that its risk disposal has entered the final stage and risk clearance is expected to be achieved in 2027 [4].

The Chinese government is considering new measures to reverse the predicament of the real estate market, including:

• Providing mortgage subsidies for first-time homebuyers
• Increasing income tax rebates for mortgage borrowers
• Reducing housing transaction costs [5]

However, the Central Economic Work Conference shows that

, and policy support is relatively limited [1].

:

• The number of pending pre-sale applications in Hong Kong has plummeted to 7,187 units, a monthly drop of nearly 18%,埋下 a "supply gap"隐患 around 2027 [3]
• Under the pressure of high interest rates and rising construction costs, developers have significantly slowed down the pace of applying for pre-sales

:

• Rigid demand remains stable, but overall purchasing power is limited
• Changes in population structure and slowing urbanization process affect long-term demand

• The market is still in the stage of digesting inventory, and the “buyer-dominated” pattern continues
• Supply pressure is expected to gradually ease from the second half of 2026 to 2027
• Housing prices are expected to show a slow upward trend supported by the interest rate cut cycle, with an increase of about 3-5% [3]

• Market differentiation intensifies, and core areas of first-tier cities are relatively stable
• Third- and fourth-tier cities face continuous adjustment pressure
• Opportunities for the development of the rental market increase

• The real estate market may find a new supply-demand balance point
• Return from investment属性 to residential属性
• A new pattern adapted to population aging and the new stage of urbanization will be formed

1. High-quality Properties in Core Areas
   : Core areas of cities with net population inflow
2. Rental Market Investment
   : As the rent-to-sale ratio improves, the value of rental investment increases
3. REITs Products
   : Professionally managed real estate investment tools that diversify risks

1. Policy Risk
   : Policy changes such as the expansion of property tax pilots
2. Liquidity Risk
   : Real estate investment has a long realization cycle and is difficult to liquidate
3. Market Differentiation Risk
   : Huge differences in trends between different cities and different sectors
4. Debt Risk
   : The financial situation of some developers continues to deteriorate

1. Lower Expected Returns
   : Return from past high-growth expectations to reasonable returns
2. Focus on Cash Flow
   : Prioritize projects where rental returns cover investment costs
3. Diversify Investments
   : Avoid over-concentration in a single region or property type
4. Long-term Holding
   : Real estate investment is more suitable for long-term holding strategies

Comprehensive analysis shows that

:

1. Increased rental yield
   is a fact, but holding costs and vacancy risks need to be considered
2. Compared with bank deposits
   , it has advantages, but poor liquidity and high thresholds
3. Policy support is limited
   , and market adjustment may still take time
4. Differentiation intensifies
   , and investment requires more selection and professionalism

For ordinary investors, it is more suitable to

at present, focusing on high-quality areas in core cities, with the goal of long-term holding and stable cash flow rather than pursuing short-term capital appreciation. At the same time, it is recommended to properly allocate other investment varieties to achieve diversification of the investment portfolio.

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[1] Yahoo Finance - “Comparison of Central Economic Work Conferences Past and Present: Real Estate Priority Slips to the Bottom”
[2] Yahoo Finance - “Vanke Carries Huge Debt of RMB 390 Billion, Regulators Refuse to Rescue, Report Says Authorities Have Formulated Measures to Control the Situation”
[3] Yahoo Finance - “Unsold First-hand Units Fall Below 19,000; De-stocking May Have Hidden Risks | Market Returns to Fundamentals Testing Buyers’ Skills”
[4] Yahoo Finance - “HSBC Private Banking: Hang Seng Index Target 31,000 by End of Next Year; Expected Fed to Cut Rates in December and Stay Put Next Year”
[5] Bloomberg - “China Weighs New Property Stimulus Package as Crisis Lingers”