Contracted sales across 25 major Chinese residential developers monitored by Morgan Stanley declined 9% year-on-year in April, based on CRIC data, reducing the cumulative year-to-date sales shortfall to 31% year-on-year.
The brokerage underscored that, despite the moderation in the monthly drop, it is taking a cautious stance on whether sales momentum in top-tier cities will hold. The firm flagged that broader recovery beyond those urban centers remains unclear.
Breaking the data down by developer size, attributable sales for the top 50 and top 100 groups fell 6% and 10% year-on-year in April, respectively. Those monthly outcomes compare with steeper declines of 20% and 19% recorded in March and translate into year-to-date declines of 19% and 21% year-on-year for the two groups.
State-owned enterprises (SOEs) continued to outpace peers in April. CR Land (HKG:1109), CMSK, Jinmao (HKG:0817), China Overseas Land & Investment - COLI (HKG:0688), and C&D (HKG:1908) reported year-on-year sales increases of 50%, 47%, 26%, 20%, and 19%, respectively.
By contrast, several private and other developers recorded sharp sales contractions. The report cites CIFI, Midea Real Estate, Longfor, Seazen (SS:601155), and Zhongliang with declines exceeding 40% year-on-year. Semi-state-owned developers Vanke and Gemdale experienced falls of 58% and 43% year-on-year, respectively.
Morgan Stanley attributed the relative outperformance of SOEs to stronger brand recognition and greater availability of new saleable resources concentrated in top-tier cities. The firm also observed that secondary-market transactions in top-tier cities have shown improvement since March, but stressed there is insufficient evidence that the rebound has spread to a wider set of cities.
Looking ahead, Morgan Stanley recommended investors watch a set of indicators from May through July: primary and secondary sales volumes, home prices, rental rates, and the volume of secondary listings. The brokerage reiterated a selective investment stance, continuing to favor CR Land, Seazen, and C&D. It added that, should robust sales continue, COLI and Jinmao could also display relative outperformance given their larger exposure in Tier 1 cities.
Note: The article reports results and recommendations as stated by Morgan Stanley and the CRIC data referenced in the original release.