Jinwu Financial News | CITIC Securities said that China's real estate may have five ways to absorb existing housing stock, namely 1) promoting the recovery of market transactions, 2) buying vacant commercial housing by state-owned platforms, 3) encouraging enterprises and institutions to buy stock housing in batches, 4) buying residents' stock housing in a trade-in place, and 5) optimizing stock project planning. These routes have all been initially verified by local authorities and are expected to be gradually promoted in the future.
In the medium term, if all distribution plans for affordable housing are completed through repurchases, and the land market and repurchases form a virtuous cycle, then the maximum repurchase limit can reach 40% of the scale of new housing transactions, which will have a huge impact on the digestion of existing housing stocks. Of course, the ultimate solution to the problem of housing stock digestion is still market recovery, especially the stabilization of housing prices in core cities. The bank expects that a multi-pronged policy to absorb housing stock will work.
The bank is optimistic about the investment prospects of the real estate industry chain and recommends real estate companies with core resource reserves and good development capabilities; recommends property service companies with reliable corporate governance and continuous cash inflows, such as China Resources Vientiane Life (01209) and Greentown Services (02869); and recommends Shell (02423), a real estate transaction service platform that continues to grow.