According to the Futu Securities News APP, China Index Research Institute released the sales performance ranking of Chinese real estate enterprises in the first half of 2024. In the first half of 2024, the total sales of the top 100 real estate enterprises was RMB 2,083.47 billion, a year-on-year decrease of 41.6%, and a decrease of 3.8 percentage points compared with the previous month. Of the top 100 real estate enterprises, the sales in June decreased by 19.55% year-on-year, an increase of 26.05% month-on-month, both of which were better than in May. Typical enterprises such as Greentown China, China Construction Yipin, and Xingyao Real Estate Group have strong sales growth. There are six real estate companies with sales of over RMB 100 billion, which is one less than the same period last year. There are 44 real estate companies with sales of over RMB 10 billion, a decrease of 34 compared with the same period last year. The equity sales of the top 100 real estate enterprises was RMB 1,464.16 billion, and the equity sales area was 79.615 million square meters.

Chart: Average sales and growth rate of TOP100 real estate enterprises from January 2021 to June 2024

Chart: Monthly sales of TOP100 real estate enterprises from January 2019 to June 2024 (unit: RMB 100 million)

In the first half of 2024, the sales of real estate companies in all camps decreased. Among them, the average sales of the top 10 real estate companies were RMB 102.96 billion, a year-on-year decrease of 33.2%; the average sales of the top 11-30 real estate companies were RMB 25.95 billion, a year-on-year decrease of 46.9%; the average sales of the top 31-50 real estate companies were RMB 11.38 billion, a year-on-year decrease of 52.8%; and the average sales of the top 51-100 real estate companies were RMB 6.14 billion, a year-on-year decrease of 45.7%.

Chart: Sales growth of various camps in the first half of 2024

Number of camps: 44 real estate companies with sales of over RMB 10 billion, and camp adjustments are still ongoing.

Chart: Number of real estate companies with sales of over RMB 100 billion and RMB 10 billion from 2021 to 2024 (January to June)

In the first half of 2024, the number of real estate companies with sales of over RMB 50 billion in each camp decreased. Specifically, there were six real estate companies with sales of over RMB 100 billion, a decrease of one compared with the same period last year, with an average sales of RMB 133.08 billion. There were four companies in the second camp (RMB 50-100 billion), a decrease of six compared with the same period last year, with an average sales of RMB 57.78 billion. There were six companies in the third camp (RMB 30-50 billion), a decrease of ten compared with the same period last year, with an average sales of RMB 38.72 billion. There were 28 companies in the fourth camp (RMB 10-30 billion), a decrease of 17 compared with the same period last year, with an average sales of RMB 16.32 billion.

Table: Number of camps and average sales of TOP100 real estate enterprises in the first half of 2024

Completion rate: The sales targets set are maintained at the average level in recent years, and the completion rate exceeds 40%.

Real estate sales targets are relatively conservative and have been maintained at the average level in recent years. In the first half of 2024, looking at the sales targets of typical real estate companies, only Yuexiu Property and Tande Co., Ltd. increased their sales targets, and most of the other listed real estate companies maintained the average level in recent years. In recent years, as the industry enters an adjustment period, more and more real estate companies no longer increase sales targets and pursue scale development, but instead actively control sales scale to pursue more stable development.

Table: Sales targets and completion status of some real estate companies in the first half of 2023 and 2024

Looking at the sales target completion rate, the completion rate of real estate sales targets in the first half of the year is only 40%. In the first half of 2023, the average completion rate of typical real estate companies was 41.5%, a decrease of 21.6 percentage points compared with the same period last year. With the implementation of a package of real estate policies in the third quarter of 2024 to boost market confidence, the market activity will improve, and real estate sales will improve.

Performance analysis

1. Cities: The contribution rate of first-tier cities' performance continues to increase, Shanghai has the highest contribution and the highest growth.

Chart: Sales distribution of representative real estate companies in various grade cities in the first half of 2024

【1】20 representative real estate companies including Poly Developments and Holdings Group, Vanke, China Overseas Land & Investment, China Resources Land, China Merchants Shekou Industrial Zone Holdings, Greentown China, Longfor Group, Jinfeng Corporation, Yue Xiu Property, Hangzhou Binjiang Real Estate Group, Zhuhai Huafa Properties, China Jinmao, Seazen Holdings, Gemdale Corporation, China Railway Construction Corporation, China Communications Construction Real Estate, Poly Real Estate, COFCO Joy City, China State Construction International Holdings, and Midea Real Estate.

Chart: Sales distribution of representative real estate companies in the top 10 cities in the first half of 2024

Shanghai has the highest sales contribution rate, and the contribution rate of Shanghai, Hangzhou, and Xi'an is increasing rapidly. In the first half of 2024, the top three cities in terms of sales contribution for 20 representative real estate developers were Shanghai, Hangzhou, and Guangzhou, with sales contribution rates of 12.8%, 9.7%, and 8.0%, respectively. Shanghai's sales contribution rate has continued to rise compared to the same period in 2023, with an increase of 2.0 percentage points, the largest increase among the top 10 cities; Hangzhou has risen from the third in the same period of 2023 to the second, and the sales contribution rate has increased by 1.6 percentage points, second only to Shanghai; Xi'an's sales contribution rate has increased by 1.4 percentage points and has entered the top ten cities in terms of representative enterprise sales proportion. Beijing, Nanjing, and Suzhou's sales contribution rates decreased by 1.6, 1.2, and 0.9 percentage points respectively year-on-year, and their rankings have slightly declined compared to the same period in 2023. Overall, the sales contribution degree of key cities to representative enterprises has basically remained stable, and the largest increase or decrease in sales proportion has not exceeded 2 percentage points, further reflecting the steady development strategy of representative enterprises.

The real estate market is still in a period of deep adjustment, and core cities have shown strong resilience. The support behind the real estate market lies in the continuously strengthening regional economic development potential and population attraction. The sales contribution of the top 10 cities of representative real estate developers in the first half of 2024 overlaps by 90% with the top 10 cities of China Real Estate Development and Investment Attractiveness Index 2024 published by the China Real Estate Information Corporation. In terms of specific cities, the four first-tier cities of Beijing, Shanghai, Guangzhou, and Shenzhen have obvious advantages in investment attractiveness; Hangzhou, as a benchmark city for China's digital economy, has accelerated the cultivation of new momentum for industrial development, and its investment attractiveness has remained fifth in the country for seven consecutive years; Chengdu, Suzhou, Nanjing, and Xi'an have large economic and population scales, obvious industrial advantages, and strong market demand. Under the requirement to accelerate the construction of the "human-housing-money" element linkage mechanism, population flow will truly determine the direction of future resource allocation such as housing, land, and funds. The population attraction of core first- and second-tier cities is prominent, and population net growth continues to be maintained, which provides long-term development space for the real estate market. At the same time, the industrial foundation of core urban agglomerations/city clusters is strong, forming an important support for the real estate market with strong fundamentals.

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Chart: Sales Contribution of Key Projects in Different City Levels and Area Segments in 2023 and the First Half of 2024

The sales proportion of improvement-type and high-end-class projects has increased significantly. In the first half of 2024, the sales proportion of improvement-type projects in the 140-200 square meter range for representative enterprises has increased significantly, up 4.2 percentage points to 24.7%; the sales proportion of high-end-class projects in the 200 square meters and above range is 22.0%, an increase of 2.8 percentage points year-on-year, second only to improvement-type projects. Overall, the proportion of sales of improvement-type and high-end-class projects has increased, reflecting that under the premise of meeting basic residential needs, home buyers are increasingly pursuing the improvement of living conditions. In contrast, the sales proportion of 0-90 square meters for rigid demand-type projects and 90-140 square meters for first replacement-type projects has declined, decreasing by 0.1 and 6.9 percentage points year-on-year, respectively.

The sales proportion of improvement-type and high-end-class projects has increased in representative enterprise cities of all levels, with the greatest increase in first-tier cities. By city level, the sales proportion of improvement-type projects in the 140-200 square meter range and high-end-class projects in the 200 square meters and above range in first-tier cities has increased by 8.6 and 8.9 percentage points, respectively, with the increase being more significant; in second- and third-fourth-tier cities, the proportion of sales of improvement-type and high-end-class products has increased by a smaller margin than that in first-tier cities, but they have also achieved growth. In contrast, the sales proportion of first replacement-type products in cities of all levels has declined, with the sales proportion in first-tier, second-tier, and third-fourth-tier cities declining by 6.4, 2.3, and 6.5 percentage points, respectively.

2. Product: The sales proportion of improvement-type and high-end-class projects has increased

In the first half of 2024, representative real estate developers used multiple methods to aggressively recover receivables, such as launching the "trade-in" program, and further promoting sales system reform, and strengthening sales conversion efficiency through digital analysis, online and offline integration, and other means.

On the one hand, real estate developers actively launched the trade-in program. Developers launched a new and old replacement program for commercial housing, where homebuyers can trade in their old house at an appraised value to purchase new homes within a specified project. For example, China Merchants Shekou Industrial Zone Holdings combined promotions such as special-priced Western-style villas, no-worries trade-ins, and discounted prices with local project progress during the "618" period. Jianfa Properties provided customers participating in the trade-in program with the lowest promotional price and an additional property fee subsidy when they purchase a new house. On the other hand, real estate developers continue to deepen sales system reform, optimizing marketing mechanisms from management, talent, mechanism, resources, and other perspectives to promote project clearance. For example, China State Construction Engineering Corporation South China deepened marketing and market-oriented reform. They adhered to winning the rhythm, daily linked plate customers, weekly analyzed customers, comprehensively analyzed market fees and competition products, and deployed sales rhythms monthly. Sales of Xipai Yefu rose by 108% month-on-month from May to June, and Jiangmen Tiejiancheng's new signing contract in the second quarter increased by 208% month-on-month. Since 2024, the proportion of digital transactions has exceeded 20%, achieving innovative victory.

3. Marketing: Launching the "Trade-In" Program to aggressively recover receivables and continuously deepening sales system reform

4. Outlook: The effect of the May 17 real estate policy package will gradually become apparent, and the market activity of core first- and second-tier cities is expected to continue, and real estate developers' sales will show improvement

In terms of policy, in June, regulatory authorities continued to promote policy implementation. The State Council's executive meeting on June 7 further clarified the direction of stabilizing the market and reducing inventory policies, and departments such as the central bank, the Ministry of Housing and Urban-Rural Development, and the Ministry of Natural Resources successively held meetings to implement related measures. The central bank pointed out that it will focus on promoting the landing and effectiveness of re-lending policy for guarantee-guaranteed housing by learning from the experience of previous pilot programs; the Ministry of Housing and Urban-Rural Development has clarified that the acquisition of completed stock commercial housing for the construction of guarantee-guaranteed housing will be expanded to cities and counties; the Ministry of Natural Resources has studied and issued a total of 18 policy measures on disposing idle land, among which it emphasizes that in terms of "standard acquisition and recovery," emphasis should be placed on situations where recovery should be carried out according to law, and equivalent exchange and other methods can be used for negotiated recovery. When the acquired and recovered land is used for guarantee-guaranteed housing, it can be supported by special local government bonds and other funds, but efforts should be made in accordance with one's capability and firmly avoid adding to local government's hidden debt.

At the local level, in June, many places continued to implement policies optimizing the real estate market. Beijing followed up on the new policies of May 17, lowering the down payment ratio and mortgage interest rates for first- and second-home purchases, and recognized the purchase of a second home by families with multiple children as a first-home purchase, and supported the promotion of "trade-in" for houses. Shanghai eliminated the requirement for a maximum premium rate of 10% for land prices, and Nanjing launched the second batch of "trade-in" activities for housing; Suzhou clarified that buyers can apply for settling after purchasing a house, while Suzhou, Shijiazhuang, Xiamen, and other places optimized the public housing fund loan policies and increased the upper limit of housing fund loans.

From the market performance perspective, policy effects are gradually showing, core city market sentiment is picking up, and under the drive of real estate enterprises' mid-year performance sprint, the scale of new house transactions in key cities in June rebounded from May, and the month-on-month decline in June was significantly narrowed under the influence of a low base. The activity of the second-hand housing market remains high, and it increased year-on-year under the low base during the same period. The transaction performance is better than that of new houses, and the policy effects are obvious in cities such as Shanghai, Shenzhen, and Hangzhou. Since June, the number of days of signings for second-hand houses in Shanghai has exceeded 1,000 sets.

From the perspective of real estate enterprises, efforts will be made to speed up destocking. Firstly, the government's collection and storage of unsold new houses, the gradual implementation of policies such as state-owned enterprises' exchange of old for new, and other models will play a positive role in destocking as they are widely promoted across various cities and with the landing and implementation of supporting funds in the future. Secondly, efforts will be made to strengthen promotion. Under further optimization of the external environment, real estate enterprises should accelerate their efforts to promote sales growth by seizing opportunities.

Overall, the implementation of the real estate policy package on May 17 has a good boosting effect on market confidence. In the short term, the activity of core first- and second-tier cities is expected to continue for a period of time, which will provide certain support for the national market. However, the overall pace of market recovery still depends on the improvement of residents' income expectations, and the national new housing market may still be in the stage of bottoming out in the short term. In terms of destocking, local governments may accelerate the implementation of policies such as local state-owned enterprises' collection and storage of unsold new houses, and acquisition of stockpiled land, etc., to help real estate enterprises speed up the recovery of funds and help resolve industry risks. It is expected that with the simultaneous optimization of supply and demand, the real estate market will accelerate its stabilization and recovery, and the sales of real estate enterprises will improve somewhat.