GRA Market Weekly (2026-01-04)

Policy Watch

MOF and STA adjust VAT policy on individual home sales, exempting homes held more than two years

On 29 December, the Ministry of Finance and the State Taxation Administration issued the Announcement on VAT Policy for Individual Home Sales:

• Where an individual (excluding general VAT taxpayers among sole proprietors, the same below) sells a home held for less than two years, VAT is payable on the full amount at a levy rate of 3%
• Where an individual sells a home held for two years or more (inclusive), VAT is exempt

The announcement takes effect from 1 January 2026.

State Council: plans to lift or ease hukou restrictions in all but a few megacities

On 23 December, the State Council's report on establishing and improving institutional mechanisms for integrated urban-rural development was submitted to the Standing Committee of the National People's Congress for deliberation. The report shows that from 2019 to 2024 the national urbanisation rate of the permanent resident population rose from 62.7% to 67%, while the ratio of urban to rural per capita disposable income narrowed from 2.64 to 2.34. The flow of factors between urban and rural areas has become smoother in recent years, but issues still requiring attention include strained public school places for compulsory education and public rental housing in cities receiving concentrated inflows of population, and limited channels for revitalising idle rural homes.

The report notes that factor flows between urban and rural areas have become smoother, with continued progress in the urbanisation of rural migrants. Household registration reform has deepened: hukou restrictions have been essentially abolished in cities with urban permanent resident populations below 3 million, eligibility has been further relaxed in cities of 3-5 million, and points-based hukou policies in megacities and supersized cities continue to be optimised.

Market Watch

Shanghai: five urban-village redevelopment plots sold by agreement at year-end for RMB 4.668 bn

Data from the Shanghai Municipal Bureau of Planning and Natural Resources show that on 25-26 December the city closed five urban-village redevelopment plots by agreement transfer, for a total consideration of RMB 4.668 bn, spread across Baoshan, Fengxian and Pudong New Area.

• The Gucun plot in Baoshan was taken by locally focused Dahua Group at RMB 1.22289 bn, an accommodation value of RMB 23,508/sqm. The plot belongs to the Gucun old-market-town urban-village redevelopment project, with site area of 2.89 ha, plot ratio 1.8 and planned GFA of 52,020 sqm. Requirements include provision of one domestic waste room, one renovation waste room and one bulky waste room
• The Beigang plot in Fengxian was won by a Beigang & Shui On consortium at RMB 362.59 m, an accommodation value of RMB 16,802/sqm. The plot is a sub-plot of the Beigang area urban-village redevelopment project, with site area of 1.66 ha, plot ratio 1.3 and GFA of 21,580 sqm. It requires no less than 100 sqm of integrated ground-floor retail, and fully fitted-out residential GFA must account for more than 50% of total residential GFA
• Part of the Zone C plot in the Zhoupu Zitong residential area, Pudong New Area, was won by a CSCEC Eighth Engineering Bureau & Kangqiao Industrial consortium at RMB 299.40 m, an accommodation value of RMB 30,879/sqm. The plot belongs to the Zitong residential area Zone C urban-village redevelopment project, with site area of 0.96 ha, plot ratio 1.01 and GFA of 9,700 sqm
• The Beicai plot in Pudong New Area went to Shanghai Pudong Development Group at RMB 844.76 m, an accommodation value of RMB 42,513/sqm. The plot belongs to the Beicai Town old-market-town urban-village redevelopment project, with site area of 1.11 ha, plot ratio 1.79 and GFA of 19,870 sqm. The transferee must hold 100% of the plot-ratio GFA of community retail space for the full land tenure

ChinaAMC Equity and CR Land launch Runying Huaxia, a RMB 300 m shopping centre Pre-REITs fund

On 25 December 2025, ChinaAMC Equity Investment, a wholly owned subsidiary of China Asset Management (ChinaAMC), together with CR Land, established Runying Huaxia, a private equity fund investing in shopping centres. Runying Huaxia has a fund size of RMB 300 m, with ChinaAMC Equity as fund manager, funded jointly with CR Land and leading domestic institutional investors. It is the first Pre-REITs fund in recent years to be established by the private equity subsidiary of a mutual fund manager in China.

Runying Huaxia focuses on quality shopping centres, adopting a hybrid "operating plus development" strategy, with plans to invest in two operating malls - Xixian MIXC in Xi'an and Guiyang MIXC ONE - plus a mall under construction in Dalian. As an equity private fund pursuing a Pre-REITs strategy, Runying Huaxia's target projects may, subject to applicable laws and regulations, give priority to exiting via public REITs.

China Merchants Commercial REIT acquires its first Hong Kong student accommodation asset for HKD 206 m

On 29 December, China Merchants Commercial REIT (01503.HK) signed, through a wholly owned subsidiary, to acquire its first student accommodation project in Hong Kong. The property, on Austin Road in Kowloon, is an existing asset with total GFA of c. 23,600 sq ft in a prime location adjacent to The Hong Kong Polytechnic University. Valued at HKD 213 m in November, it was purchased for HKD 206 m, a 3.3% discount. Following completion, the REIT plans to convert the property into modern student accommodation with 85 beds, with lower floors reconfigured as shared living spaces such as lounges and a fitness centre. The move will further optimise the REIT's asset mix and deliver long-term sustainable value and returns to unitholders.

China Merchants Commercial REIT (01503.HK) is a REIT listed on the Hong Kong Stock Exchange, sponsored by central SOE China Merchants Shekou and listed in December 2019, focused on quality commercial properties in the Greater Bay Area plus Beijing and Shanghai. As at end-2024, its portfolio comprised five office properties in Shenzhen and one retail property in Beijing, with overall occupancy of 90.6% and an annualised distribution yield of c. 9.2%.

Project Watch

CDH Investments acquires the base Suhe serviced apartments in Jing'an, Shanghai

On 29 December, the base Suhe project at 518 Xinjiang Road, Jing'an District, Shanghai, was formally acquired by CDH Investments. "base" is the serviced apartment brand of Jinhe Asset Management, jointly established by Jinhe Group and Warburg Pincus and focused on existing-asset conversion. The sale represents the "exit" leg of Jinhe Asset Management's invest-finance-manage-exit cycle, realising value at a high point, while CDH intends to refurbish the project in pursuit of strong profits and returns.

Converted from an aging star-rated hotel, the project has, since opening in 2018, maintained occupancy above 93% and GOP above 80% on the back of flexible 49-165 sqm layouts and steady operational management - a demonstration of resilient, mature operations. Under Shanghai's Implementation Opinions on the Renewal and Upgrading of Commercial Buildings issued in July 2025, the project will complete a planning adjustment to commercial-financial land use with compatible R4 rental housing, raising the share of sub-70 sqm units to over 70% and meeting the criteria for recognition as government-subsidised rental housing.

KKR completes acquisition of the Incheon Cheongna logistics centre in South Korea

On 30 December, US private equity giant KKR and its Korean asset management platform Kreate Asset Management jointly announced the completion of the acquisition of the Incheon Cheongna logistics centre, through a fund managed by Kreate in Korea. Public sources describe the transaction as the largest single logistics asset deal in Korea to date; the consideration has not been disclosed.

Corporate Watch

China Cinda and China Orient bid directly at public land auctions in Kunming's Junzhang area

Between 5 and 22 December, two real estate companies under China Cinda Asset Management's Shenzhen branch won c. 1,035 mu (c. 690,000 sqm) of land in the Junzhang area of the Songming Vocational Education New Town, Kunming, across four batches, for a total of c. RMB 673 m. The land covers residential, commercial, school, healthcare and park uses, with an overall plan resembling a large integrated community. Earlier, between 15 August and 20 November 2025, Kunming Donggu Yuyun Real Estate under China Orient Asset Management had secured c. 310 mu (c. 207,000 sqm) of land of various types in the Junzhang area across six batches, concentrated on the west side of Songkun Avenue, for a total of c. RMB 393 m.

Cross-referencing the area's regulatory plan with early marketing materials for Evergrande Cultural Tourism City shows that the plots already acquired by, and still to be offered to, Cinda and China Orient all sit within the original Evergrande Cultural Tourism City master plan. Evergrande Cultural Tourism City claimed a total site area of c. 16,000 mu at the time, with land primarily sourced from its acquisition of Yuxing Zhongtian. Some of that land has been developed, some remains undeveloped or unsold, and some has been reclaimed by the government. The recent acquisitions by Cinda and China Orient through public tender, auction and listing procedures are very likely a special form of enforcing their claims following multi-party coordination, with the primary aim of completing title confirmation and clarifying the form of the assets.

Market Data

Shanghai's high-end market stages a year-end supply surge, with supply up 45% MoM

As at 30 December, three out of every ten new homes on offer in Shanghai were luxury units priced above RMB 100,000/sqm, with supply up 45% from the prior month. In the final week alone (24-31 December), around 20 projects launched in quick succession, eight of them at registered average prices above RMB 100,000/sqm.

Across the full year, the high-end segment remained a key support for Shanghai's housing market. In 2025, 34 projects recorded a combined 65 same-day sell-outs, of which 22 were luxury projects priced above RMB 100,000/sqm accounting for 35 sell-outs; several - Feiyun Yuefu, Lujiazui Qiantan Mansion, Kerry Jinling Huating and Shanghai No.1 Yard - sold out repeatedly on launch. That said, polarisation within the high-end segment is increasingly pronounced, and not every premium project sells well: among projects priced above RMB 100,000/sqm launched since December, close to 60% recorded launch subscription rates below 30%.

Shanghai new and secondary home transactions continue to recover in December 2025, with new-home registrations of 19,544 units hitting a yearly high

In December 2025, Shanghai registered 19,544 new home transactions, up c. 19.48% MoM, and 22,961 secondary home transactions, up c. 0.08% MoM. New-home registrations reached a yearly high, while secondary registrations hit an eight-month high.

Secondary asking prices nonetheless continued to fall in December. Data from leading Shanghai agencies show the average secondary asking price at c. RMB 56,157/sqm in December, down c. 0.8% from end-November and marking ten consecutive months of decline since February 2025. Data from Lianjia, a leading Shanghai agency, show listings also continuing to shrink: Lianjia's public listings numbered c. 93,900 units at end-November, falling to just c. 88,000 units at end-December, down c. 6.28% MoM.

Commercial-use land transactions in key Yangtze River Delta cities reach c. RMB 661.6 bn in 2025

In January-December 2025, commercial-use land transactions across key Yangtze River Delta cities (Shanghai, Hangzhou, Hefei, Nanjing, Suzhou, Wuxi, Changzhou, Nantong and Ningbo) totalled c. RMB 661.6 bn by value and c. 40.26 m sqm by area.

By city, Hangzhou ranked first by transaction value at RMB 161.254 bn, with Shanghai second at RMB 144.818 bn. By area, Nantong ranked first at 8.2831 m sqm, with Nanjing second at 5.5112 m sqm.

At the corporate level, the top 30 buyers by land spend across these key Yangtze River Delta cities in 2025 acquired c. RMB 368.1 bn of land on an all-inclusive basis. Greentown China led with RMB 45.268 bn, followed by Binjiang Group at RMB 37.949 bn, then China Overseas Land, China Merchants Shekou, China Jinmao and Poly Developments.