Real estate profits continue to shrink, with multiple real estate companies issuing profit warning announcements for 2025.

Recently, many real estate companies have issued profit warnings for 2025, becoming the most direct signal of the current industry's deep adjustment. According to WIND data, as of January 20th, more than 26 listed real estate companies, including Greenland Holdings Corporation, Zhuhai Huafa Properties, Gemdale Corporation, China Fortune Land Development, and Beijing Capital Development, have already announced that they expect to incur losses in 2025. Greenland Holdings Corporation expects a net loss of 16-19 billion yuan; Beijing Capital Development has also explicitly stated that it is still in a loss state; Zhuhai Huafa Properties has experienced an annual loss for the first time since its listing in 2004. The total size of the disclosed losses for real estate companies is currently estimated to be between 47.546 billion yuan and 62.464 billion yuan. Industry insiders believe that the warnings already issued may just be the beginning. It is reported that around 68.1% of listed real estate companies incurred losses in the 2024 fiscal year, and as the March 2026 annual report season approaches, more listed real estate companies are expected to announce performance pre-loss or decline. YUEXIU PROPERTY (00123) also released an announcement on January 23rd, stating that due to the continuous adjustment of the real estate market, the core net profit for 2025 is expected to be in the range of 250-350 million yuan. Behind the pressure on profits is a significant decline in revenue for real estate companies. National Bureau of Statistics data shows that in 2025, the national sales area of newly built commercial housing decreased by 8.7% year-on-year, and sales revenue decreased by 12.6% year-on-year. According to data from CREIS, the total sales revenue of the top ten real estate companies in 2025 decreased by approximately 16.2% compared to 2024, with many leading real estate companies experiencing double-digit declines in sales revenue. Experts believe that the real estate industry is still in a period of deep adjustment, and the provision for inventory asset impairment is one of the main factors affecting the current profits of real estate companies. However, this provision for impairment is based on financial prudence principles and early identification of potential risks. When the market environment improves in the future, the current concentrated impairments will also provide room for profit recovery after the industry's revival. YUEXIU PROPERTY's move, consistent with the recent actions of many top real estate companies in recent years, reflects a common approach to strengthening risk control and consolidating asset quality at the current cycle bottom. The capital market's reaction to this profit fluctuation is also becoming more rational. A securities firm analyst told reporters, "Investor focus is shifting from a single profit statement to the core asset quality and financial safety margin of the company. In the current market, companies with a stable financial style and a high concentration of land reserves in high-energy core cities such as Beijing, Shanghai, and Guangzhou have stronger demand support for their assets and better risk resistance. Once the market situation improves, these companies are likely to have a competitive advantage in profit elasticity and speed of recovery." Several brokerage research reports also support this view. Institutions believe that real estate companies that can continue to meet the "three red lines" green file requirements and maintain positive operating cash flow during the industry adjustment period typically have a thicker financial safety cushion. This not only gives them a unique ability to counter-cyclically layout in the land market but also makes them more likely to grasp the dual opportunity of profit margin restoration and market bottoming out, achieving a leading revaluation of performance and valuation compared to their peers. Looking ahead, the industry has shown initial signs of stabilizing. In December 2025, the month-on-month decline in the sales price of residential properties in 70 large and medium-sized cities began to narrow. CICC analysis indicates that as historical burdens continue to be digested, the industry's gross profit margin is expected to gradually recover from 2026 onwards with the improvement of the cost structure. In the next one to two years, the industry's main theme will continue to be digestion and adjustment, and those real estate companies with high-quality assets, stable finances, and a demonstrated recovery trend ahead of the cycle are more likely to seize the dual opportunities of profit margin restoration and market bottoming out, achieving a revaluation of performance and valuation ahead of their peers.