Executive Summary: Key Market Shifts
– The intensive, multi-year campaign to ensure the delivery of pre-sold homes across China has achieved its core objectives, with over 7.5 million ‘hard-to-deliver’ units handed over, significantly mitigating systemic risk.
– Major developers, including Country Garden (碧桂园) and Sunac (融创), have largely completed their delivery obligations and are now focusing on debt restructuring and rebuilding operational sustainability.
– Central policy directives for 2026 firmly establish a new development model, moving away from high-leverage practices and prioritizing risk control, inventory optimization, and the quality of housing supply.
– A cornerstone of this new model is the gradual nationwide implementation of on-site property sales, aiming to create a ‘what you see is what you get’ market to protect consumers and ensure long-term stability.
– Early signs of price stabilization in key metropolitan areas, coupled with these structural reforms, provide a cautiously optimistic outlook for institutional investors and market participants.
A Chapter Closes: The Delivery Assurance Campaign Concludes
For nearly three years, the specter of unfinished apartments and defaulted pre-sales loomed over China’s property sector, shaking consumer confidence and investor nerves. That chapter is now decisively closing. The national ‘保交房’ (ensure housing delivery) campaign, a top-priority risk mitigation effort, has reached its culmination, marking a critical turning point for the industry’s recovery trajectory.
Quantifying the Achievement: Millions of Homes Delivered
Recent disclosures from major developers underscore the scale of this accomplishment. Country Garden (碧桂园) reported delivering approximately 1.85 million units between 2022 and 2025, stating its assurance work is in the final stages. Greenland Holdings (绿地控股) achieved deliveries of around 760,000 units over four years, while Sunac (融创) surpassed 720,000 cumulative deliveries. Other significant players like CIFI Holdings (旭辉), Zhongnan Construction (中南置地), and Seazen Holdings (新城控股) also reported delivery volumes in the hundreds of thousands. At the national level, data from the Ministry of Housing and Urban-Rural Development (住房和城乡建设部) confirms that about 7.5 million previously ‘hard-to-deliver’ homes have been successfully handed over to buyers. Notably, 99% of the 3.96 million units targeted under the special campaign have been delivered.
The Systemic Response: A Multi-Pronged Risk Mitigation Framework
This success was not serendipitous but the result of a coordinated, top-down framework. The establishment of national, provincial, and municipal taskforces enforced accountability among local governments, developers, and financial institutions. The pivotal ‘白名单’ (white list) financing mechanism, part of the real estate financing coordination system, approved over 7 trillion yuan in loans to support viable projects. For insolvent developments, accelerated judicial processes like bankruptcy reorganization prioritized homeowners’ rights. This ‘one building, one policy’ approach provided the tailored solutions necessary to untangle complex situations, effectively restoring a fundamental level of trust in the pre-sale system while setting the stage for its eventual evolution.Developers in Transition: From Survival to Sustainable Operations
With the immense pressure of mass deliveries lifting, real estate companies are pivoting their focus inward. The new imperative is to repair balance sheets, reactivate ‘blood-making’ capabilities, and adapt to a market that no longer rewards reckless expansion.
The Debt Resolution and Operational Restructuring Imperative
‘The most important task for the past four years was ensuring delivery. That pressure is now largely gone,’ shared an executive from a major East China-based private developer. This sentiment is echoed across the sector. Firms like Country Garden, Sunac, CIFI, and Jinke (金科) have made substantive progress in debt restructuring or reorganization processes in 2025. The operational strategy is also shifting markedly. As another top private developer noted, with minimal new land acquisitions in recent years, construction pipelines have shrunk. ‘2026 could be a year of resetting, but we remain extremely prudent on land investment, avoiding poor-location or excessively high-ticket plots,’ the insider added. The industry is collectively moving from a volume-driven, leverage-fueled model to one emphasizing financial health, project quality, and efficient inventory management.Emerging Green Shoots: Signs of Market Bottoming
Concurrent with this corporate restructuring, the market itself is showing nascent signs of stabilization. Yan Yuejin (严跃进), Vice President of the E-house China R&D Institute (易居房地产研究院), observes that real estate risks have ‘clearly converged.’ He notes, ‘Recently, signs of price bottoming have become clearer, with some cities, especially first-tier ones, showing signals of stabilization.’ The reduction in project suspensions, a rise in timely and high-standard deliveries, and a decline in premature mortgage repayments all contribute to rebuilding consumer confidence. These are foundational elements for a more durable market recovery, suggesting the worst of the downturn may be over for core markets.The New Policy Blueprint: Stabilization, Risk Control, and Model Innovation
The policy direction for the coming years is unequivocal. The central government has outlined a comprehensive framework designed to prevent a resurgence of past excesses while guiding the sector toward high-quality development. This framework explicitly supports the move towards on-site property sales as a systemic reform.
Directives from the Central Economic Work Conference and Beyond
The 2025 Central Economic Work Conference set the tone, emphasizing the need to ‘hold the bottom line’ and actively yet prudently resolve risks in key areas, with a core goal of stabilizing the real estate market. It called for city-specific policies to control new supply, reduce inventory, and optimize the housing stock. Crucially, it endorsed the purchase of existing homes for conversion into social housing and the orderly advancement of ‘好房子’ (good house) construction. The guidelines for the 15th Five-Year Plan (十五五规划) further cement ‘promoting high-quality real estate development’ as a long-term objective, covering system building, supply structure, quality enhancement, and risk prevention.Institutional Foundations: The Three-Pillar Approach Explained
In a recent interview, Minister of Housing and Urban-Rural Development Ni Hong (倪虹) detailed the institutional pillars for the new model. First, in development, the ‘project company system’ will be strengthened to ensure capital is ring-fenced and used exclusively for its intended project. Second, in financing, a ‘lead bank system’ will be implemented, where one bank or a consortium takes overall responsibility for a project’s funding. Third, and most significantly for market practice, in sales, there will be a gradual push for the on-site property sales system. This shift to selling completed homes aims to achieve the ‘所见即所得’ (what you see is what you get) principle, fundamentally altering the buyer-developer relationship and eliminating pre-delivery completion risk. The national housing conference in late 2025 reiterated that stabilizing the market remains a 2026 priority, empowering city governments to use their policy autonomy to support rigid and upgradin demand.Implementing the Core Reform: The Gradual March Toward On-Site Sales
The transition to on-site property sales represents the most profound operational change on the horizon. This move away from the long-dominant pre-sale (预售) system is poised to reshape industry cash flows, developer business models, and consumer expectations.
The Rationale: Enhancing Consumer Protection and Market Stability
The pre-sale model, while instrumental in rapidly expanding housing supply during decades of scarcity, entrenched a high-leverage, high-turnover approach. Its weaknesses were laid bare during the market correction, as buyers bore the risk of developer insolvency. The on-site property sales system directly addresses this by transferring the inventory and financing risk from the consumer back to the developer until the product is fully ready. This should lead to more disciplined development planning, higher construction quality as homes must be market-ready, and a significant boost to consumer confidence. For the market overall, it reduces the speculative froth associated with off-plan purchases and promotes price discovery based on tangible assets.The Implementation Pathway: Gradualism and Local Pilots
Minister Ni Hong’s wording—’gradually push for’—is key. An abrupt, nationwide mandate is unlikely. Expect a phased approach where pilot programs in cities with healthier market fundamentals lead the way. Some regions have already experimented with related measures. The implementation will likely be integrated with other policies, such as using acquired vacant inventory for social housing, which helps absorb existing stock while the new sales model is incubated. The success of this transition hinges on parallel reforms in project financing (the lead bank system) and development oversight, ensuring developers have access to the longer-term working capital required to build before sale.Investment Implications in a Transforming Landscape
For global institutional investors, fund managers, and corporate executives, this sectoral pivot presents a recalibrated risk-return matrix. The era of easy beta gains from broad property exposure is over, replaced by a focus on alpha generated through selective positioning and deep fundamental analysis.Identifying Opportunities in a Stabilizing Ecosystem
The effective resolution of the delivery crisis removes a major systemic overhang. Developers with restructured debt, clean balance sheets, and a focus on core metropolitan areas with solid demand fundamentals are best positioned. The policy push for ‘good houses’ and urban renewal creates niches for firms excelling in quality construction, green building, and integrated community development. Furthermore, the financial sector, particularly banks involved in the lead bank system, may see more transparent and secure lending opportunities tied to specific, pre-approved projects. The gradual move to on-site property sales could ultimately benefit larger, well-capitalized developers with strong reputations, as consumer preference shifts towards trusted brands that can deliver finished product.Persistent Risks and Monitoring Metrics
Investors must remain vigilant. The recovery is nascent and uneven; sales and price stability in lower-tier cities remain fragile. The debt resolution process for many smaller developers is ongoing and could involve further volatility. Key metrics to watch include month-on-month sales volume in major cities, the pace and terms of developer debt restructurings, detailed rules from local governments on on-site sales pilots, and the scale of funding for the ‘white list’ and social housing acquisition programs. Any signs of a renewed slowdown in broader economic growth could also test the resilience of the current stabilization trends.Synthesizing the Path Forward for Market Participants
The Chinese real estate sector stands at a definitive inflection point. The arduous battle to deliver promised homes has largely been won, restoring a basic level of market integrity. The focus has now irrevocably shifted to constructing a more sustainable future. The policy commitment to a new development model, with the gradual implementation of on-site property sales at its heart, signals a profound long-term change. This evolution promises greater consumer protection, reduced systemic financial risk, and a return to competition based on product quality rather than financial engineering. While challenges remain in managing the transition and supporting broader economic momentum, the clearing of the delivery backlog and the emergence of price floors in key markets provide a solid platform for cautious optimism. For sophisticated investors, the mandate is clear: move beyond the crisis narrative, conduct granular analysis of companies and cities adapting to the new rules, and position portfolios to capitalize on the stability and quality-focused growth that defines the next chapter of Chinese real estate. Monitor local policy rollouts closely, as the successful execution of on-site property sales will be a critical benchmark for the sector’s sustainable revival.