China’s property market poised to decline at least through 2026, S&P analyst says

Nationwide primary property sales are expected to fall 8 per cent in 2025 and between 6 to 7 per cent in 2026 China's vast property mark...

Nationwide primary property sales are expected to fall 8 per cent in 2025 and between 6 to 7 per cent in 2026

China's vast property market is expected to continue to decline at least through the next year, according to S&P Global Ratings.

"We estimate nationwide primary property sales will fall 8 per cent in 2025 and between 6 to 7 per cent in 2026, as overall demand remains soft," said Edward Chan, director at S&P Global Ratings, at a webinar on Thursday.

This will continue to put pressure on Chinese developers, many of which are going through the challenge of delivering homes, while maintaining their operations to meet their debt obligations, the firm said.

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Distressed Chinese company Cifi Holdings, for example, said it will restructure US$8.1 billion of its offshore debt, following other mainland developers' efforts to update their financial reconstruction plans.

According to a stock exchange filing on Thursday, Cifi will cancel its existing debts, release current debtors from their obligations, issue about US$6.73 billion in new bonds and pay roughly US$9.5 million in cash to creditors - a plan that is expected to strengthen its capital structure and reduce its offshore obligations by around US$1.4 billion.

Shanghai-based Cifi said it expected to obtain shareholder and regulatory approvals by the end of this month.

The company's initiative reflects how China's debt-ridden developers have picked up the pace in restructuring their hefty liabilities in the fifth year of the country's real estate downturn.

That comes as creditors, who see little hope for a turnaround in the sector, have lost patience, according to analysts.

Earlier this week, Sunac China Holdings said its second offshore debt restructuring plan was approved by a majority of creditors at a court-convened meeting in Hong Kong.

Country Garden Holdings, meanwhile, said its controlling shareholder had agreed to convert US$1.14 billion in loans to equity as part of its offshore debt restructuring programme.

Although largely coincidental, this flurry of announcements showed the efforts being made by developers, creditors and government authorities to achieve significant progress on restructuring before the end of this year, according to Glen Ho, Deloitte's Asia-Pacific contingency planning and insolvency leader.

At this stage, Ho said it was more about getting things done and moving on, and less about fighting over financial terms. "Most stakeholders just want to reach an agreement and put this behind them," he added. "They've lost patience. They are tired of waiting."

China's property sector and its entire supply chain, from construction to furniture, once accounted for about a quarter of the country's gross domestic product.

"Deals are getting done, given the gap between market expectations have narrowed," said Ron Thompson, managing director and head of Alvarez & Marsal's Asia restructuring practice. "Previously, creditors were optimistic on a potential turnaround, while developers were acutely aware of the challenges they were facing and generally were more conservative."

"We expect most developers who are looking to restructure their offshore debts to reach a commercial agreement with their creditors over the next three to six months and to close their restructurings in 2026," Thompson said.

The ongoing property downturn has affected everything in China's economy, from employment to consumer spending.

For this downward trend to stop, S&P's Chan said inventory - the stock of homes that developers have built but not yet sold - will need to stabilise and decline.

"When that happens, home prices may gradually stabilise," he said. "Stabilisation in home prices is very important to support homebuyers' confidence, which remains quite fragile at the moment."

Despite years of decline in the development of new projects on the mainland, Chan pointed out that the "overall inventory level is still climbing".

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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.

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