According to Zhuozhong Finance APP, data released by the China Index Academy shows that in 2024, the Real Estate industry achieved bond financing of 565.31 billion yuan, a year-on-year decrease of 18.4%. Among this, credit bonds decreased by 18.5% year-on-year, overseas bonds decreased by 69.5%, and ABS decreased by 13.6%. Overseas bonds continue to decline at a low level, with credit bonds becoming the absolute Block Orders, and ABS financing accounting for over one-third. Looking ahead to 2025, policy support is expected to drive recovery of expectations, but the recovery of the Real Estate market still faces many challenges. Financing policies are expected to remain loose, but the financing scale will still be affected by market recovery.

The China Index Academy stated that in 2024, the overall China Real Estate market continues to show an adjustment trend. The Political Bureau meeting on September 26 proposed "promoting the stabilization of the Real Estate market", sending the strongest stabilizing signal. Relevant departments and local governments actively implement policies, and since the fourth quarter, the core city markets have shown significant warming. Financing support policies for real estate companies remain relaxed, with financing tools becoming more diverse, while the scale of bond financing continues to decline, with credit bonds and ABS becoming the absolute Block Orders.

1. Financing scale: decreased by 18.4% year-on-year, continuing the downward trend.

In 2024, the Real Estate industry achieved a total of 565.31 billion yuan in bond financing, a year-on-year decrease of 18.4%. The industry began entering a downward cycle in the second half of 2021, with financing scale significantly dropping, and the downward trend continued in 2024, with a larger decrease compared to the previous year. Among this, credit bonds decreased by 18.5% year-on-year, overseas bonds decreased by 69.5%, and ABS decreased by 13.6%. Overseas bonds continue to decline at a low level, with credit bonds becoming the absolute Block Orders, and ABS financing accounting for over one-third. From a monthly perspective, since September, influenced by last year's low base, the total amount of bond financing has shown continuous year-on-year growth for several months, with a slight warming of real estate company financing, but its sustainability remains to be observed.

Figure: Financing structure in 2024

Data source: China Index Data CREIS

From the perspective of funding for Real Estate Development companies, the scale continues the downward trend since 2022, and the actual financing environment has not significantly improved. Among these, due to the boost from urban financing coordination mechanisms 'whitelist', operational property loans, and financial policies like the '16-point policy', the proportion of domestic loans and self-raised funds has increased, while the decline in sales has adversely affected the funding situation of real estate companies. The deposit and advance payments and personal mortgage loans both saw significant declines. From January to November 2024, the funding received by Real Estate Development companies was 9.66 trillion yuan, a year-on-year decrease of 18.0%, which is a narrowing of 1.2 percentage points from January to October. Among these, domestic loans amounted to 1.35 trillion yuan, a year-on-year decrease of 6.2%, with the decline narrowing by 0.2 percentage points from January to October; the proportion was 14.0%, an increase of 1.8 percentage points compared to the same period last year. Self-raised funds were 3.47 trillion yuan, a year-on-year decrease of 11.0%, with the decline widening by 0.5 percentage points from January to October; the proportion was 35.9%, which is an increase of 3.0 percentage points compared to the same period last year. Deposits and advance payments totaled 2.96 trillion yuan, a year-on-year decrease of 25.2%, with the decline narrowing by 2.5 percentage points from January to October; the proportion was 30.7%, which is a decrease of 3.1 percentage points compared to the same period last year. Personal mortgage loans amounted to 1.39 trillion yuan, a year-on-year decrease of 30.4%, with the decline narrowing by 2.4 percentage points from January to October; the proportion was 14.4%, which is a decrease of 2.7 percentage points compared to the same period last year.

2. Financing Structure: Credit Bonds are the main source of financing, with an increase in the proportion of ABS issuance.

Credit Bonds: The monthly issuance scale at the end of the year has rebounded, with central state-owned enterprises being the absolute mainstay of issuance.

In 2024, the issuance size of credit bonds in the Real Estate Industry was 344.85 billion yuan, a year-on-year decrease of 18.5%, accounting for 61.0% of the total financing scale, which is basically the same as last year. The average issuance term is 3.16 years, with the proportion of issuance terms over 3 years being 45.7%, an increase of 3.7 percentage points from last year, indicating an extension of terms. Among these, the issuance term of credit bonds by mixed ownership and private real estate companies has been extended, with the total amount of bonds issued over 3 years significantly increasing. Companies such as New Town, New Hope, Golden Bright, Excellence, and MIDEA REAL EST successfully issued 5-year medium-term notes, providing favorable conditions for improving their debt term structure.

From a monthly perspective, the issuance of credit bonds showed an overall declining trend in the first nine months, with the issuance scale in September dropping to a low of less than 20 billion; since October, the issuance scale has continuously rebounded, with October and December each showing year-on-year growth due to last year's low base effect, resulting in a year-end tail phenomenon.

From the perspective of issuance structure, the main issuers of credit bonds are central and local state-owned enterprises, with state-owned enterprises accounting for over 90% of issuances this year, an increase of 2.5 percentage points from last year; the issuance proportion of private enterprises and mixed-ownership enterprises has decreased. In 2024, private enterprises will continue to issue bonds at a low level; among the issuing companies, there will be 8 private or mixed ownership companies, a decrease from last year and mostly consisting of large companies that have not faced risks, making it difficult to benefit most cash-strapped private enterprises.

Currently, the issuance channels for credit bonds remain open to high-quality real estate companies, but the number of overall beneficiaries is relatively limited. In September, the central bank announced it would extend the '16-point financial policy' from the end of 2024 to the end of 2026. Support for private real estate companies issuing bonds will continue to be implemented, which will help companies diversify their financing channels, especially as the real estate market stabilizes. Some real estate companies focusing on core cities and operating steadily may benefit first, thereby obtaining more abundant financial support.

Table: The issuance scale of various types of corporate credit bonds in 2023 and 2024.

Data source: China Index Data CREIS

Overseas Bonds: Continuing to decline from a low level, with shorter maturities.

In 2024, the issuance scale of Overseas Bonds is only 6.9 billion yuan, a year-on-year decrease of 69.5%, accounting for 1.2% of the total financing scale, down 2.0 percentage points from the previous year; the average issuance term is 2.50 years, with all issuance terms being less than 3 years, indicating shorter maturities, making it difficult for real estate companies to obtain long-term funding support from Overseas. In terms of individual months, there were no new bond issuances from August to December, with the overseas bond channel nearly closed, and in other months only a few high-quality enterprises were capable of issuing Overseas Bonds, primarily state-owned enterprises such as Yuexiu and Minmetals.

ABS: The proportion of financing scale has increased, supported by underlying assets such as CMBS/CMBN.REITsThe proportion exceeds sixty percent.

In 2024, the ABS financing scale was 213.76 billion yuan, a year-on-year decrease of 13.6%, accounting for 37.8% of the total financing scale, an increase of 2.1 percentage points from the previous year; the average issuance term was 9.85 years, with a significant extension of the term. In terms of single months, in the first half of the year, the average monthly issuance scale of ABS was only about 15 billion yuan, while in the second half, the ABS issuance returned to normal, with an average monthly issuance scale exceeding 20 billion yuan. The issuance scale in October slightly declined, but the year-end issuance scale rebounded again.

From the issuance structure, types like REITs, CMBS/CMBN became the main issuance categories, accounting for 38.1% and 31.5%, respectively. The proportion of REITs increased rapidly, with an issuance share rising by 20.7 percentage points. Overall, in the year, ABS product types remained mainly those supported by high-quality underlying assets, and the ABS channel has always been open to companies holding quality held assets.

Regarding public REITs, since the policy window opened, seven Consumer infrastructure REITs have been launched, with issuers including Jinmao, Wumart, China Resources, Yinyi, Bailian, Shouchuang, and Grandjoy Holdings Group, covering enterprises of different ownership types. Public REITs for industrial parks continue to expand, and in November, the first publicly offered REIT for private enterprises was issued, by China International Capital Corporation.REITThe net subscription amount was 1.617 billion yuan, and public REITs have opened the door to asset securitization for many private industrial parks, helping these companies reduce financing costs, expand financing channels, and revitalize existing assets. In the year, new Indemnificatory Apartment REITs were introduced, with China Merchants Fund completing the issuance of the China Merchants Shekou rental housing REIT, with an issuance scale of 1.364 billion yuan. In July, asset types for infrastructure public REITs expanded to include retirement facilities. After more than three years of development, the public REITs market has entered a normalized issuance phase, with a stable upward trend. On January 3, 2025, the National Development and Reform Commission announced at a State Council Information Office press conference that greater efforts would support the expansion and growth of the infrastructure REITs market, making public REITs an important financial tool for real estate companies to revitalize existing assets and transition to new development models.

In the year, the Shanghai Stock Exchange and Shenzhen Stock Exchange promoted the accelerated landing of held real estate ABS products, which is another financial tool for revitalizing existing assets. In November, the CITIC SEC - Yuexiu Commercial Held Real Estate Asset Securitization Special Plan was successfully issued, marking the first commercial property held real estate ABS in the market, with the targeted properties being ICC Huamao Tiandi and its underground parking lot, and the project issuance scale was 1.413 billion yuan.

Currently, financial tools such as infrastructure REITs and held real estate ABS are continuously being implemented, providing valuable exit channels for shopping centers, Long Term Rentals, and industrial parks. The financial closed loop of the full cycle of operating held properties has become more complete. In an industry downturn phase, held properties have become an important means for real estate companies to revitalize assets and supplement funding, while real estate companies can also benefit from diversified operations, gradually changing operational models and transitioning to new development models.

Figure: 2024 ABS issuance structure.

数据来源：中指数据CREIS年内，中交地产、陆家嘴等上市房企完成A股定增，募集资金净额分别为0.438 billion元、1.797 billion元；融创向中金国际配售0.489 billion股认购股份，配股融资总额约1.205 billion港元。外高桥定增方案尚未实施。支持房企股权融资政策也将持续实施，随着政策底和市场底到来，资本市场对房地产板块信心有望恢复，也将为房企定向增发打开通道。保利发展计划发行可转换公司债券，拟募资总额不超过9.5 billion元；华发拟发行不超过5.5 billion可转债，可转债兼顾了固定收益和股权投资两种工具特点，在当前房地产板块低迷、市场筑底阶段，不失为一种两全工具。

3.融资利率：资金成本明显下降

2024年行业债券平均利率为2.95%，同比下降0.72个百分点。受今年连续降息、融资企业结构和产品结构变化等因素影响，行业债券平均融资成本明显下降。其中信用债平均利率为2.86%，同比下降0.71个百分点；海外债平均利率为5.22%，同比下降1.17个百分点；ABS平均利率为3.01%，同比下降0.59个百分点。

表：各渠道平均融资利率

Data source: China Index Data CREIS

Conclusion

In 2024, the financing policy continues to be loose, but the scale of bond financing is still in a declining channel. The uncertainty of market recovery has increased investors' doubts about the Real Estate industry, and has also made companies adopt a cautious attitude towards new financing, leading to a continued reduction in financing scale.

The recovery of the Real Estate market next year still faces many challenges. Companies should also plan their cash flow in advance and fully utilize various financing policy supports to increase cash inflow. Actively use project 'whitelist' mechanisms, operational property loans, support for real estate companies to issue bonds, Private Placement, public REITs, and Hold-type real estate asset-backed securities to expand financing cash inflow through multiple channels, and possibly extend the maturity of existing debt or refinance.