SH/HZ visits: bifurcated market recovery; luxury market sustainability as key focus

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SH/HZ visits: bifurcated market recovery; luxury market sustainability as key focus

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Property - China/Hong Kong

SH/HZ visits: bifurcated market recovery;

luxury market sustainability as key focus

Industry Overview

Sentiment swings on bottoming pace 30 June 2026

China property stocks have been weak on negative sentiment around the pace of market Equity

bottoming. Key concerns include: (1) sequential sales slowdown in top-tier cities— Hong Kong/China

seasonal but raising fears of a stalled recovery; (2) weak macro data, undermining Real Estate/Property

confidence in recovery sustainability; and (3) high opportunity cost of early positioning Karl Choi, CFA >>

amid strong performance in global AI-related names. While July–August is seasonally Research Analyst

soft, we expect the softening to be less than last year (primary sales in Jul/Aug typically Merrill+852 3508Lynch3108(Hong Kong)

30% weaker than Q2 pace) given improving fundamentals (better affordability, lower karl.choi@bofa.com

secondary inventory, stabilizing rents). Although we admit that a full decoupling from Eric Du >>

Research Analyst

macro is unlikely, but a bifurcated recovery—supported by tech-driven cities like Merrill Lynch (Hong Kong)

Hangzhou—is plausible. With share prices near 2H25 lows, downside appears limited; key +852 3508 3329 eric.du@bofa.com

risk remains weak employment and income expectations. Top picks: CRL, COLI, C&D.

During our visit, we note CRL has rolled out more innovative marketing tactics, while

C&D is leading project designing for ultra-high end residential project. Please see Exhibit 7 for a list of

abbreviations used

SH/HZ visits: Bifurcated market recovery underway

Field visits and expert feedback suggest: (1) Centaline Research Head Mr.