Last year, 233.6 billion yuan worth of houses were sold. China Resources Land bets on a single-project strategy, with management believing that "the hardest period has already passed."

Ask AI · Why does management think the real estate industry’s toughest period is over?

This article is sourced from Time Finance. Author: Liang Zhengyu

After the real estate scale dividend ebbs, the project’s own quality and the ability to sell/clear inventory are becoming the key variables determining real estate companies’ performance.

Image source: TuChong Creative

On March 30, China Resources Land (01109.HK) released its 2025 annual results.

During the period, the company recorded revenue of 281.44 billion yuan, up slightly by 0.9% year over year; profit attributable to shareholders was 25.42 billion yuan, down slightly by 0.5% year over year. The sales side was also affected by the environment, with full-year property contracted sales of 233.6 billion yuan, down 10.5% year over year. In an industry-wide downcycle, this performance is not surprising—old growth models driven by scale expansion have already failed.

Pressure has also been transmitted to profitability.

In 2025, China Resources Land achieved gross profit of 59.74 billion yuan, down 1.0% year over year; consolidated gross margin was 21.2%, down 0.4 percentage points year over year. Among them, gross margin for development and sales-type businesses was 15.5%, down 1.3 percentage points year over year.

China Resources Land’s chief financial officer, Zhao Wei, admitted that the overall gross margin and development gross margin have declined over recent years, mainly due to dramatic changes in the market environment for development businesses. However, the stable income from the company’s operating real estate leasing business, to a certain extent, offsets earnings volatility and provides support for overall profit.

In 2025, China Resources Land’s operating real estate leasing-type business achieved revenue of 25.44 billion yuan, up 9.2% year over year, and net profit of 9.87 billion yuan, up 15.2% year over year.

As for industry trends, management’s view is becoming more rational.

“We believe the industry’s most difficult period is already behind us and we have officially entered a period of bottoming out, recovery, and deep differentiation.” Chen Wei, China Resources Land’s Chief Operating Officer and Vice President, said that core cities and high-quality segments will stabilize first, while other cities will achieve a slow repair on the basis of gradually digesting existing inventory.

Against this backdrop, Zhao Wei expects the company’s overall gross margin still has room to rebound. “Raising it by 2–3 percentage points from the current level is still possible, and it will not depend entirely on an increase in the share of operating real estate leasing-type business.”

Despite industry adjustment, China Resources Land did not choose simple contraction; instead, it proactively adjusted its development path—further focusing its efforts on the development business as its core “main base,” and explicitly提出 entering a “single-project era.”

This strategy has already been validated in core projects.

On March 22, Shenzhen Bay Yanxi II opened, and cumulative sales exceeded 23.9 billion yuan within 4 months of launch. On March 27, Shanghai Yanqi Binjiang launched its fourth batch; it became this year’s first project in Shanghai to trigger sales restrictions. Within 4 months of launch, it closed nearly 500 units, with cumulative sales reaching 10.8 billion yuan. On December 5, 2025, Beijing Runyuan opened for the first time, collecting 3.5 billion yuan; within 3 months, sales exceeded 5 billion yuan, ranking first as sales leader locally for two consecutive months.

Around the “single-project era,” China Resources Land tightened and optimized at both the investment and development ends.

In terms of land acquisition strategy, it adheres to the principles of living within one’s means and making precise investments. Relying on the area-level coordinated development capability, it improves the quality of resource acquisition. In 2025, the company acquired 33 land parcels with equity consideration of 67.37 billion yuan; by the end of the period, its total land reserves reached 46.73 million square meters.

On the development end, it further strengthens structural and pacing management.

China Resources Land’s CEO Xu Rong said that the development and sales-type business will continue to advance “adjusting the structure, adjusting the schedule, and adjusting the layout,” focusing on residential core product categories. It will select projects with moderate scale, good marketability, projects with customers’ effective demand, and differentiated competitive advantages, in order to match the competitive needs of the “single-project era” and achieve rapid conversion of resources.

However, management is also keeping a cautious outlook on the short-term market.

Board Chairman Li Xin said that in 2026 to 2027, the development business will still face certain pressure. The market will mainly repair, and companies therefore need to focus more on the quality of inventory clearance and operational efficiency.

Based on this, Li Xin proposed more pragmatic medium- and long-term targets for the development business: by the end of the “15th Five-Year Plan” period, the revenue scale of development and sales-type business will be maintained in the range of 200 billion–250 billion yuan, representing about 70%–75% of total revenue. Profit contribution will be close to 40%, and it will continue to maintain its position among industry leaders.