HK Stock Market Move | The shares of domestic property developers continue to decline, as the real estate development sector ushers in a new model. The business model of real estate companies and their valuation anchors are facing a reassessment.

Chinese real estate stocks continued to decline. As of the time of writing, GREENTOWN CHINA (03900) fell by 3.78%, trading at HKD 5.855; R&F PROPERTIES (02777) dropped by 3.09%, trading at HKD 0.188; SUNAC (01918) decreased by 2.56%, trading at HKD 0.57; SEAZEN (01030) fell by 2.46%, trading at HKD 1.385. In terms of news, on August 28, the Ministry of Housing and Urban-Rural Development and four other departments jointly issued a series of documents, including the "Notice on Improving the Commodity Housing Sales System," establishing three main pillars: selling existing homes, project corporatization, and the lead bank system. This intends to systematically restructure the pre-sale system and high-leverage financing model that has operated in the real estate industry for over twenty years. Shenwan Hongyuan Group pointed out that the business models and valuation anchors of real estate companies are facing re-evaluation. Guotou Securities International published a research report stating that the new policy requires the regulation of pre-sale funds to be lifted only after project completion and acceptance, which will raise developers' financing costs in the short term and may further drag down already weak real estate investment. At the same time, the new policy extends the maximum term for personal housing loans to 40 years, aiming to alleviate the short-term cash flow pressure on homebuyers, but its effect on boosting demand may be limited. In the future, real estate development may become more concentrated among large real estate companies and state-owned enterprises.