CICC: Signs of "bottoming out and stabilizing" in mainland real estate market, projected total new home sales to reach between 8 trillion to 8.5 trillion yuan for the whole year.

CICC has released a report stating that there are signs of "stabilization and recovery" in the mainland real estate industry. From January to April 2025, nationwide sales of new commercial housing reached 2.7035 trillion yuan, with a year-on-year decline narrowing to 3.2%. Although there are some imbalances in supply and demand in certain areas, the residential market is expected to stabilize in 2025, with total new home sales expected to be between 8 trillion and 8.5 trillion yuan for the year. In terms of policy, the second half of the year may see a continuation of policies such as reducing inventory, unlocking existing land resources, supporting sales of existing homes, making minor adjustments to housing finance policies, and promoting the development of the rental market. In terms of investment recommendations, it is suggested to prioritize state-owned developers with lower valuations, followed by private industry leaders with land reserves in first and second-tier cities, and other private developers are ranked last. The report also points out that the Hong Kong real estate market in 2025 faces macroeconomic uncertainties, but key positive factors are emerging. Population growth and a significant drop in HIBOR are expected to stabilize the residential market, with residential prices expected to increase by 3%, 5%, and 5% respectively from the second half of 2025 to 2027. The retail sector is under pressure due to changes in local and visitor consumption habits, but the trend of mainland visitors shopping in Hong Kong is easing rental pressure, leading to an overall mild adjustment. The office market, with high vacancy rates and new projects coming online, has limited rebound potential and requires a cautious approach. The preference ranking for the Hong Kong real estate industry is as follows: retail REITs > low-leverage residential developers > retail property owners > REITs/developers with a high proportion of office properties, with Link REIT as the preferred target.