Group News

Reform and Reconstruction of the Fundamental Systems of the Real Estate Sector

2026-09-29

China will focus on reforming and improving its foundational real estate systems by implementing three key mechanisms: the project‑company model, the lead‑bank system, and the ready‑to‑move‑in sales regime. These measures will clarify the strategic direction for real estate firms, shifting them from high‑leverage, fast‑turnover developers to more sophisticated providers of “good homes” that prioritize product quality and build their reputation on sound creditworthiness.

After years of development, China’s real estate market has undergone significant transformation. To adapt to the market’s new circumstances, evolving dynamics, and emerging demands, the institutional framework governing the sector must also evolve. At present, the Chinese real estate industry is undergoing a systematic restructuring of its foundational institutions.

Reforming the fundamental systems governing the real estate sector is both imperative and essential, as China’s real estate market has undergone two major shifts. First, the balance between supply and demand has changed dramatically: the market has moved from a state of persistent undersupply to one of near equilibrium, with localized oversupply emerging in certain segments. Second, the market has entered the “stock era,” with the share of secondhand‑home transactions rising from 27% in 2020 to 46% by 2025. In the first eight months of this year, according to data from the National Bureau of Statistics, secondhand‑home sales already accounted for 52% of all transactions—exceeding the 50% threshold that marks the transition to the stock era.

China will focus on reforming and improving its fundamental real estate systems by emphasizing three key mechanisms: the project‑company model, the lead‑bank system, and the ready‑property sales regime. At the heart of each of these foundational systems is a project‑centric approach, corresponding respectively to the three stages of real estate development, financing, and sales.

In real estate development, the project‑company model has been adopted to clarify the issue of who serves as the independent implementing entity for each project. Each real estate project is assigned a dedicated project company, which exercises its rights as an independent legal entity in accordance with the law. Corporate headquarters are strictly prohibited from illegally diverting funds from project companies. As a result, real estate projects operate in a more standardized and secure manner.

In real estate financing, the lead‑bank system is implemented to address the question of who will provide project financing. For each project, a single bank or a banking syndicate is designated as the lead bank; all funds for development, construction, and sales must be deposited with the lead bank, which then delivers project‑financing services to meet the project’s legitimate funding needs. Both the project company and the lead bank engage in a mutual selection process: the bank chooses the project company based on its independent assessment of the project’s merits, while the project company selects the lead bank according to its financing‑service requirements, thereby establishing a mechanism in which the lead bank and the project company share benefits and risks.

In the sale of commercial housing, the practice of selling completed units has been promoted, with the “cash-for‑key” transaction model fully implemented to ensure that buyers receive exactly what they see, thereby fundamentally mitigating delivery risks. In recent years, the sales area of commercial housing sold as completed units has consistently posted positive growth, and its share of total new‑home sales has risen year after year. Selling completed units has become an inevitable trend. New projects will prioritize this approach, while comprehensively leveraging supportive policies related to land, finance, taxation, and other areas. For projects still under pre‑sale, oversight of pre‑sale funds must be strengthened to effectively safeguard the legitimate rights and interests of homebuyers.

The objectives of all three systems are to guard against risks in real estate development, promote the industry’s sound and sustainable growth, and better safeguard the legitimate rights and interests of homebuyers.

The project‑company structure achieves risk isolation, ensuring that operational issues at a single project do not ripple through the entire enterprise or even the broader industry. The lead‑bank system aligns financing directly with individual projects, enabling more effective fulfillment of their legitimate funding needs. Furthermore, the vigorous and orderly implementation of ready‑to‑move‑in sales—where buyers receive the property immediately upon payment—fundamentally mitigates delivery risks, allaying public concerns about purchasing unfinished developments. This approach also encourages real estate developers to build according to high‑quality standards that prioritize safety, comfort, sustainability, and smart technology, thereby meeting the public’s growing demand for premium housing.

These three systems have clarified real estate companies’ transformation strategy, shifting them from high-leverage, fast-turnover developers to more refined “good‑home” providers that prioritize product quality and build their reputation on credibility.

It is foreseeable that the three systems will steer China’s real estate sector onto a path of stable, healthy, and high-quality development. Excerpted from the Economic Daily, September 23, 2026, by reporter Kang Shu.

None

“AI + Construction” Powers Innovation and Transformation in the Real Estate Sector

None

“AI + Construction” Powers Innovation and Transformation in the Real Estate Sector

Recent Company Updates