中国房地产：供应紧缩脉搏检查

EquitiesREMD Pulse check on supply squeeze China ◆Shenzhen’sabsoluteinventory has dipped toaseven-yearlow,androbustluxurysalesare validating a supply squeeze Michelle Kwok*Head of Asia Real Estate and HK Equity ResearchThe Hongkong and Shanghai Banking Corporation Limitedmichellekwok@hsbc.com.hk+852 2996 6918 ◆We believe declining land sales and new starts will point to anew equilibrium, while idle land buybackscouldofferupside Oliver Yu*Analyst, Asia Real EstateThe Hongkong and Shanghai Banking Corporation Limitedoliver.y.o.x.yu@hsbc.com.hk+852 2288 2050 ◆Prefer CRLand,C&DandSeazen–all rated Buy Shenzhen leads tier-1 cities on supply squeeze.Investors have long beenconcerned about China’s housing inventory, viewinga meaningfulclearance is theprerequisite for a broader market recovery. Now weareseeingencouragingprogress,where19cities haverecorded>10%absoluteinventory decline in the past12 months (Figure1). Shenzhenstands out withlargest decline (17%) among tier-1cities, and its inventory turnover month hasfallento 9.5months.Our supply squeezemodel suggeststhatif inventoryturnovermonthdropsto 14 months or below, homeprice could likely stabilise (The path from oversupply to undersupply, 17 May 2024).We believeShenzhen’s inventory declineis also supporting the recent strength inluxurysales(Shenzhen tour:The late-arriving spring peak season, 20 March).Followingrobust sell-through in recent high-end launches, further price hikes insignature projects would be a cleartestamentthat the supply squeeze is translatinginto firmer pricing power. Stephen Wang*, CFAAnalyst, Asia Real EstateThe Hongkong and Shanghai Banking Corporation Limitedstephen.wang@hsbc.com.hk+852 2284 1675 Charlotte Ye*AssociateGuangzhou * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and isnot registered/ qualified pursuant to FINRA regulations Massmarketis yet toturn the corner.Withintensifying competition from affordablesecondary homes(From ‘exit’ to ‘upgrade’: why resale liquidity matters, 24 March),tier-1 mass-market new homes are yet to regain traction.Price cuts have proved aneffective lever to drive volumes, but primary-market pricing is inherently less flexiblethan inthesecondarymarket. However,a meaningful share of inventory,particularlyin outlying districts,appears effectively‘invalid’. We believehome price recoverywilloccur firstin upgrader productsin top-tier cities, while abroaderrecovery acrossdifferent city tiers and products will still taketime. That said, acceleratingidle landbuybacks could tighten supply, posing upside risks to the supply squeeze. Slowerland sales add fuel to the supply squeeze.Year to date, nationwide landsupply is down 35% y-o-y by totalreserve price value, and land sales are down 40%y-o-y. Yuexiu, CR Land and China Jinmao have been proactively replenishing theirlandbanks in 4M26(Figure6).Notably, recent auctions in top-tier citiessettledat20%+premiums to reserve prices, suggestingdevelopersentiment is turning morepositive.We see a sustained revival in the land market as critical to anchoring homeprice expectations in the primary market,and improving developer earnings visibilityover the medium to longer term. Implicationsforstocks.CRL andCOLIhaveleading positionsin Shenzhen, wheretheirco-developedlandmark project, One Bay Park,achieved robust sell-throughwith decent margins. CRL (Buy) is our preferred pick among our coverage,along withC&D (Buy) which also excels in high-end products. We also like Seazen (Buy) for itsresilient shopping mall portfolio in lower-tier cities. Issuer of report:The Hongkong and ShanghaiBanking Corporation Limited Disclosures & DisclaimerThis report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, whichforms part of it. View HSBC Global Investment Research at:https://www.research.hsbc.com Source:NBS, HSBC Valuation charts Source: Bloomberg, HSBC estimates Valuation andrisks Disclosure appendix AnalystCertification The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s)whose name(s) appear(s) as author of an individual section or sections of the report and any analyst(s) named as the coveringanalyst(s) of a subsidiary company in a sum-of-the-parts valuation certifies(y) that the opinion(s) on the subject security(ies) orissuer(s), any views or forecasts expressed in the section(s) of which such individual(s) is(are) named as author(s), andany otherviews or forecasts expressed herein, including any views expressed on the back page of the research report, accurately reflecttheir personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to thespecificrecommendation(s) or views contained in this research report: Michelle Kwok, Oliver Yu and Stephen Wang, CFA Important disclosures Equities: Stock ratings and basis for financial analysis HSBC and its affiliat