GRA Market Weekly (2026-07-24)

Policy Watch

MOHURD elevates elevator retrofitting to a "priority task"; ultra-long special treasury bonds cover the sector for the first time - c. RMB 7.6 bn for 28,000 units

At the expanded meeting of MOHURD's Party Leadership Group theory study session on 17 July, elevator retrofitting was upgraded from "supported" to "to be solved", formally tied to residents' most pressing needs. Key quantitative indicators:

In 2026, ultra-long special treasury bonds cover elevator retrofitting for the first time, with c. RMB 7.6 bn allocated nationwide to support 28,000 elevator installations
Subsidy standards: RMB 250,000 per elevator for 4-6 storey buildings; RMB 300,000 per elevator for buildings of 7 storeys and above
The State Council's 15th Five-Year Plan for urban renewal: renovation of 115,000 aging urban residential compounds to commence over the next five years, averaging over 20,000 per year
Voting threshold: pursuant to Article 278 of the Civil Code, the one-vote veto is abolished in favour of a "dual two-thirds + dual three-quarters" voting rule

Elevator retrofitting has risen from a local responsibility to a nationally coordinated livelihood programme, expected to unlock a market of roughly RMB 20 bn across elevator manufacturing, installation and aging-compound renovation. For investors in existing assets, rental premiums and turnover rates of retrofitted compounds should improve markedly.

Market Watch

Hangzhou land auctions stay hot: four residential plots fetch RMB 3.984 bn

On 21 July, Hangzhou held its second land auction of the month, offering four residential-use plots. Except for one plot sold at reserve price, the other three cleared at premiums above 30%, for total proceeds of c. RMB 3.984 bn. The four plots are located in Shangcheng, Gongshu and Qiantang (two plots) districts, with a combined starting price of RMB 3.119 bn. All buyers were local developers. Binjiang Group stood out, taking the Kangqiao unit plot in Gongshu and the Changmu unit plot in Shangcheng at premiums of 39% and 34% respectively; Tianyang Real Estate secured the Yuancheng unit residential plot in Qiantang at a 38% premium; Yingguan Holdings acquired the Qiantang Haizhicheng unit plot at reserve price.

KKR and AEW move to sell commercial real estate assets in China's tier-1 cities

On 20 July, market sources reported that Wall Street private equity giant KKR & Co. and global asset manager AEW Capital Management, L.P. are seeking to sell a series of commercial real estate assets in Beijing and Shanghai. KKR's assets on offer: (1) Funlive Apartments in Daxing, Beijing (long-term rental apartments, c. 3,000 units, a dual-metro TOD complex acquired from SCE Group for RMB 1.9 bn in 2021); (2) Crystal Orange Hotel at Yu Garden on the Shanghai Bund. Core income-producing properties in Shanghai, Guangzhou and Chengdu are also entering the disposal pipeline. AEW's assets on offer: Hongsheng International Center and Jingyin International Center in Beijing, and SPD Bank Tower in Lujiazui, Shanghai (all office assets). Foreign PE is making a structural exit from China commercial real estate, driven primarily by high USD interest rates raising holding costs alongside compressed domestic returns - cap rates for core Grade A offices in Shanghai/Beijing have risen from 3.2%-3.6% in 2019 to 5.5%-6.1% today. USD funds raised in the 2017-2020 window are broadly entering their exit periods; BlackRock and Gaw Capital have already departed. Per Cushman & Wakefield, foreign capital accounted for only c. 7% of Shanghai en-bloc transactions in H1 2026.

Colliers H1 2026 China commercial real estate investment review: RMB 121.2 bn in total, +76% YoY

Nationwide en-bloc commercial real estate transactions totalled c. RMB 121.2 bn in H1 2026 across 192 deals, up 76.2% from H1 2025 (RMB 68.8 bn). By asset class:

Retail: 32 deals / RMB 37.08 bn (largest share); representative deal: an insurance consortium's acquisition of three IKEA Livat malls in Beijing, Wuhan and Wuxi (c. RMB 8 bn)
Office: 43 deals / RMB 25.74 bn; representative deal: Pinduoduo's acquisition of DBS Bank Tower in Shanghai
Hotels and apartments: 46 deals / RMB 16.78 bn, mainly through judicial auctions
Industrial and logistics: 45 deals / RMB 10.74 bn
Data centres: 1 deal / RMB 5.39 bn (Gaw Capital and Abu Dhabi Investment Authority jointly selling the Zhong'en Cloud data centre in Fangshan, Beijing)

Institutional investors/insurance capital accounted for 33.6% of transaction value (RMB 40.72 bn / 22 deals), the largest buyer group; private enterprises led by deal count. Foreign capital accounted for only c. 7%. Shanghai led with RMB 37.07 bn / 55 deals, up 37.3% YoY.

Project Watch

Tongfuyu Industrial Town redevelopment in Xili, Nanshan, Shenzhen: China Overseas takes 100%

The project sits in the Xili University Town area of Taoyuan Sub-district, Nanshan District, Shenzhen, with a construction site of 22,900 sqm and total GFA of 228,900 sqm (residential 101,400 sqm / affordable housing 8,253 sqm / commercial-cultural 15,000 sqm), planned as six residential towers (45-53 storeys) with c. 900 market-rate homes. Included in Nanshan's first batch of urban renewal plans in 2019 and five years in the making, the project obtained its record name in June this year. China Overseas South China (Shenzhen) Co., Ltd. holds 100% of the project company, with a full management reshuffle. Construction filing for the entire project was completed on 15 July, and the piling works permit for the residential plot was obtained on 20 July. Adjacent to Tsinghua Shenzhen International Graduate School, with surrounding secondary-home prices of RMB 71,000-85,000/sqm, the project is expected to launch between Q4 and early next year.

Centralised long-term rental apartments open at Wanbo CBD, Panyu, Guangzhou

Located in the core of Wanbo CBD, Panyu District, Guangzhou, the project comprises c. 28,000 sqm of GFA with 486 apartments (30-65 sqm one- and two-bedroom units) and c. 3,000 sqm of supporting retail. Monthly rents range from RMB 4,200 to 8,500, with first-week take-up above 65%. It adopts a commercial-to-rental conversion model: a formerly idle office/commercial property converted over c. 14 months at a cost of c. RMB 60,000 per room. Community retail, co-working and fitness amenities target young professionals in Wanbo CBD and workers in the Nansha Free Trade Zone. Operated under Longfor's "Goyoo" brand and held by Yuexiu Property, the project holds a two-star green building certification, with a projected annualised rental yield of c. 4.8%, room-level rental efficiency of c. RMB 5.2/sqm/day, and a conversion payback period of 8-9 years.

Corporate Watch

IKEA mandates JLL to sell eight self-held properties in China

JLL recently disclosed an exclusive sale mandate from IKEA parent Ingka Group covering eight assets in Shanghai, Guangzhou, Tianjin, Harbin, Nantong, Xuzhou, Guiyang and Ningbo, with total titled area of c. 498,000 sqm - a shift from heavy-asset ownership to asset-light operations. IKEA China's FY2024 sales were RMB 11.15 bn (-7.6% YoY, down 29% from the 2019 peak), with growing footfall but sharply lower average spend. "The assets are fully vacant with no lease encumbrances and can be delivered as-is, offering investors a highly flexible acquisition window for repositioning," JLL said. "All eight assets sit in mature commercial districts or key growth areas, with intact building volumes and clean titles, providing a solid basis for conversion to long-term rental apartments, community retail, cultural-tourism complexes or corporate headquarters."

Vanke secures another RMB 519 m loan from Shenzhen Metro

On the evening of 21 July, Vanke A (000002.SZ) announced that its largest shareholder, Shenzhen Metro Group, would provide a loan of up to RMB 519 m to repay principal and interest on its publicly issued bonds and interest on designated borrowings. The loan matures no later than three years from the first drawdown, priced at 1-year LPR minus 71 bps (currently 2.29%). The company and its subsidiaries pledged receivables and disposal proceeds held by Hainan Wanjun at a 100% pledge ratio. With pricing below 1-year LPR, the major shareholder continues low-cost support to protect public bond repayment credit and buy time. Shenzhen Metro has extended over RMB 4.5 bn in loans to Vanke since the start of 2026. Vanke guides to a H1 loss of RMB 12-15 bn, with Q1 contracted sales down 53.8% YoY. Shenzhen Metro's continued backstop reflects Shenzhen SOE support for Vanke's credit standing, but a genuine inflection in sales remains the key variable.

Property-services platform takes over hotel asset as Radiance sheds a RMB 1.3 bn debt burden

On 20 July, Radiance Holdings announced the transfer of its entire equity interest in the Sofitel Shanghai North Bund to Beijing Minyue Management Consulting Co., Ltd., wholly owned by Radiance Property Services - an intra-group asset reshuffle between related parties. The cash consideration was a token RMB 1, but the buyer assumes the target company's RMB 1.295 bn of debt. From Radiance Holdings to Radiance Property Services, this hotel disposal is less a conventional slimming-down or cash recovery than a carefully calculated tactical deleveraging of the balance sheet.

Overseas Watch

Citi raises 2026 Hong Kong home price forecast to +12%; luxury transactions hit a 31-year high

Key points from Citi's report (published 22 July):

2026 Hong Kong home price growth forecast raised from 8% to 12%, with a further 6% rise projected for 2027 (still 11% below the historical peak)
H1 2026 primary residential transactions up 34% YoY, a 22-year high; developer sales up 95% YoY
Registrations of homes priced above HKD 20 m reached 2,372 cases / HKD 111.3 bn, the highest half-year total since H2 1995
The Peak and Southside luxury transactions numbered 121 (+72.9% YoY), with mainland buyers accounting for c. 70%
Central Grade A office vacancy at a 3-year low; rent forecast raised from +2% to +3%
Full-year retail sales expected to exceed HKD 400 bn (+5% or more YoY), with street-shop vacancy at a 2-year low
Residential completions of 15,000-16,000 units per year in 2026/27, with sellable stock at a 4-year low
H2 preference order: retail > Central offices > residential > other offices