Summary of Key Points
In the first half of 2026, a wave of losses continued to affect listed real estate companies: over 70% of A-share real estate firms that have released their financial forecasts reported losses, with total losses amounting to between 38.4 billion and 50.2 billion yuan. The industry's total market value has shrunk by 66% compared to its peak in 2019. Only a few profitable companies are doing so, and their profits are largely due to one-time factors such as restructuring or transformation. The main reasons for the losses include decreased revenue, low gross profit margins, and provisions for asset impairment. The industry is still at a low point and is unlikely to turn around in the short term; any improvement in profits will not be seen until 6 to 12 months after sales stabilize.
How Severe Is the Losses?
Of the 76 A-share real estate companies that have released their forecasts, 55 (72%) have reported losses, totaling between 38.4 billion and 50.2 billion yuan. Among them:
- Even leading companies are struggling: Vanke has suffered the largest loss (12-15 billion yuan), which is more than last year. Huafa Holdings, which made a profit of 172 million yuan last year, now reports a loss of 3-4 billion yuan. OCT Group's loss has also increased significantly, from 3.4 to 4.2 billion yuan.
- Only a few companies have seen a reduction in losses: Only 14 companies have seen a decrease in their losses (for example, Greenland Holdings' loss has been reduced from 3.5 billion yuan last year to 300-400 million yuan), but the overall number of losing companies is still increasing.
Why Are There Such Losses?
There are four main reasons that highlight the industry's challenges:
1. Revenue has decreased, but costs have not: Real estate companies operate under a pre-sale system, meaning they collect money before delivering the property, which is only recognized as revenue later. Sales declined in the previous two years, and now there are fewer properties available for delivery, leading to reduced revenue. Meanwhile, fixed costs such as interest and salaries remain unchanged, resulting in losses.
2. Profitability from selling properties has decreased: Properties purchased at high prices are now selling for less due to falling market values. Additionally, companies often have to discount their products to collect payments, further squeezing their profits.
3. Asset impairment has exacerbated the situation: The value of properties and land has declined, leading to significant write-downs on the books (for example, a project that was originally valued at 1 billion yuan is now valued at only 600 million yuan, resulting in a loss of 400 million yuan).
4. High interest costs: Companies with heavy debt face high interest expenses, which further erode their profits.
How Much Has the Market Value Shaken?
The total market value of A-share and H-share real estate companies has plummeted by more than two-thirds, falling from a peak of 4.7 trillion yuan in 2019 to 1.6 trillion yuan in July 2026, a reduction of 3.1 trillion yuan (a 66% decrease).
- Stock prices are extremely low: The price-to-book ratios of leading state-owned companies are below 0.3 to 0.7, meaning they are being sold for less than half of their net assets. Privately owned companies in trouble have even lower ratios, below 0.2, indicating that the market does not believe they will recover.
How Do the Profitable Companies Succeed?
Only 21 companies have reported profits, totaling between 3.6 and 4.2 billion yuan (an average of 170-200 million yuan per company, which is much less than last year). Their success can be attributed to:
- Transformation or restructuring: Some companies, such as CCCC Development, have shifted to lighter asset operations (not acquiring land and building properties themselves but focusing on management), resulting in a profit of only 18 million yuan.
- Non-recurring revenues: Some companies, like Jinke Group, have made small profits from new businesses, but after deducting these, they still reported losses of 54-62 million yuan.
- Even leading state-owned companies are struggling: China Merchants Shekou has reported a profit of 500-650 million yuan, but this is a 55%-65% decrease year-on-year; after deducting non-recurring items, their actual profit is only 50-700 million yuan.
Will Things Get Better in the Future?
It will be difficult to turn around losses in the short term, and the industry will continue to experience fluctuations at its lowest point. Experts suggest:
- Profit improvement lags behind sales: Although sales are improving in some cities, it will take 6 to 12 months for these improvements to be reflected in revenue.
- 2026 is unlikely to see a turnaround: Even with improved sales, companies still need to deal with issues such as asset impairment and excess inventory, so the industry will likely remain in the red this year.
- Sector trends are volatile: Policies may loosen in the second half of the year, but overall recovery is slow, and stock prices are unlikely to rise significantly; they will only fluctuate occasionally.
In summary, real estate companies will need more time to move from losses to profitability. This analysis explains the current situation, the reasons for the losses, their impact, and the future prospects in simple terms, making it easy for non-professionals to understand.