Key Takeaways:
- CLSA upgraded CHINA RES LAND, CHINA JINMAO and YUEXIU PROPERTY to Outperform
- Tier-1 city home prices rose month-over-month for several consecutive months
- SOE developers' contract sales fell only 2.2% in 1H26 vs. 13.6% market decline
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CLSA upgrades 3 China developers as home prices stabilize in June
Twenty cities reported month-on-month new home price gains in June, the highest count since May 2025, as CLSA upgraded three China property developers to Outperform on signs of market stabilization.
"The primary residential market is showing initial signs of stabilization," CLSA said in a research report published July 16. The broker noted that prices of primary and secondary homes in tier-1 cities have risen month-over-month for several consecutive months, while tier-2 primary home prices have also stabilized after earlier declines.
National Bureau of Statistics data showed new home prices in China's four first-tier cities — Beijing, Shanghai, Guangzhou and Shenzhen — fell 1.3 percent from a year earlier in June, with the decline narrowing by 0.4 percentage points from May. Existing home prices in those cities dropped 4.9 percent, easing by 0.9 percentage points. On a monthly basis, first-tier home prices edged up in June, while the number of cities with month-on-month new home price increases rose to 20 from 16 in May.
CLSA said it expects state-owned enterprise developers to continue outperforming the broader market. Commodity housing sales value in the first half of 2026 sank 13.6 percent year-over-year, while contract sales of SOE developers declined only 2.2 percent during the same period. CHINA RES LAND, CHINA OVERSEAS, MERCHANTS SHEKOU and CHINA JINMAO have all resumed growth, the broker said.
CLSA assigned a price target of HKD42.4 to CHINA RES LAND, HKD2.43 to CHINA JINMAO and HKD5.5 to YUEXIU PROPERTY, all with Outperform ratings. The upgrades come as the property sector shows its strongest momentum in over a year, with the June data marking the highest number of cities reporting monthly price gains since May 2025.
The stabilization signal could drive further re-rating for SOE developers, which have already demonstrated relative resilience in sales. Investors will watch July data from the National Bureau of Statistics, due next month, for confirmation of whether the recovery is broadening beyond tier-1 cities.
This article is for informational purposes only and does not constitute investment advice.
