China Property: A Long-Awaited Change to More Proactive Tone on Property Policymaking
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BofA notes that a January 1, 2026, article in Qiushi magazine signals a potentially more proactive tone in China's property policymaking. The article recognizes the financial and investment attributes of real estate, reaffirms its status as a pillar industry, and calls for comprehensive rather than piecemeal measures. BofA interprets this as an effort to smooth market volatility and promote long-term stability rather than immediately reversing the downtrend.
The report highlights substantial structural demand, noting that upgrading and renovation needs remain massive. Approximately 40% of urban households have less than 30 square meters of living space per capita. Furthermore, an assumed 2% obsolescence rate on a 35 billion square meter housing stock implies significant replacement demand.
With the sector trading at an average of 7.5 times 2027E P/E and a 30% NAV discount, BofA sees contrarian investment opportunities for 2026. Top picks include CR Land, China Overseas Development, and C&D International. Conversely, Country Garden remains rated Underperform.