Mining Expert Calls "#3 China Property: a divergent recovery" Major

Research evidence excerpt

Mining Expert Calls "#3 China Property: a divergent recovery" Major

ew Jones

Analyst

Tier 1 vs Tier 2 cities: UBS expect Tier 1 cities to lead the recovery: secondary andrew-i.jones@ubs.com

transaction volumes are expected to hold at the current improved levels, with +44-20-7901 6545

tightening market balance from higher sales/lower listings supporting a Steve Friedman

stabilisation in prices in 2026 before modest growth (~2%) in 2027; at the same Analyst

time, there are no clear signs of a rebound in lower tier cities. We note that lower- steve.friedman@ubs.com

tier cities still account for ~60% of total GFA (sales/start) and are therefore a proxy +27-11-322 7252

for commodity demand; as demand in lower-tier cities continues to structurally Sharon Ding

weaken, the mix of land transactions and new starts will continue to shift towards Analyst

Tier 1-2 cities. This is marginally positive for commodity demand given the higher sharon.ding@ubs.com

commodity intensity per unit of construction in urban areas. +852-2971 6284

Lachlan Shaw Secondary vs primary markets: UBS expect the secondary sales (and rental)

market to continue outperforming primary markets, increasing from ~50% of the

lachlan.shaw@ubs.com

transaction mix in 2025 to ~60% by the end of the decade; this continues to +61-3-9242 6387

impact commodity consumption by slowing new home sales/starts. Over the past

year, the price gap between primary vs secondary properties has widened, driven

by a more significant decline in secondary properties especially in Tier 1 cities (~35-

40% from the peak in 2021); at the same time, new home prices were stable on

reported data due to government controls that limit how much developers can cut

official prices. As a result, new homes are now priced at a visible premium to