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2026-10-21 11:32:25 Goldman Sachs published a research report lowering its forecast for structural demand in China's property market for 2027-2035 by 16%. The bank expects a key turning point in the mainland property market by 2035, mainly driven by the transition to a completed-home sales model and deterioration in inventory supply pipelines. Goldman Sachs expects primary supply to shrink sharply, helping home prices stabilize in 2029. It therefore raised its forecast for average selling price growth in Shanghai and Shenzhen over the next two years from 15% to 20%. The bank also expects new housing starts and real estate fixed asset investment to bottom out and recover in 2032, while the share of secondary market transactions is expected to reach 75% by 2035. The bank believes sales model reforms will slow the recovery in return on equity across the industry, favoring developers with more saleable resources, longer land bank duration and lower leverage. Goldman Sachs lowered its average core earnings forecasts for covered companies for 2026-2028 by 2% to 27% to reflect reduced contract sales and margin forecasts. Goldman Sachs estimates that reforms in the primary market sales model will marginally benefit secondary market transactions. It expects secondary residential transaction volume to remain above 700 million square meters during 2026-2028 before falling back to around 600 million square meters thereafter. The share of the secondary market in the overall market is expected to rise from 53% in 2026 to around 75% in 2035. Goldman Sachs downgraded GREENTOWN CHINA (03900.HK) to "Neutral" with a TP of HKD7.2 due to its relatively weaker balance sheet. The bank maintained "Buy" ratings on CHINA OVERSEAS (00688.HK), CHINA RES LAND (01109.HK) and CHINA JINMAO (00817.HK), while maintaining "Sell" ratings on SEAZEN (01030.HK) and CHINA VANKE (02202.HK). Among mainland property stocks, Goldman Sachs continues to favor CHINA OVERSEAS (00688.HK) and CHINA RES LAND (01109.HK) due to their higher-quality saleable resources and lower leverage. (gc/u)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |