Vanke Should Rely on External Funding Support as Property Sales Stay Subdued

As one of the primary developers in China focusing on middle-range to high-end properties, China Vanke experienced a more than 20% revenue CAGR from 2014-19 as the market boomed. Property development remains the largest contributor to revenue with an over-80% mix, but the housing demand slowdown and price decline since 2021 have weighed on sales. We expect the downsizing to persist for Vanke in the short run as sales in lower-tier cities continue to underperform. Looking beyond the near-term headwind, an uptick in homebuyers’ confidence, easing home purchase restrictions, and local governments' renewed support will lead to a sales rebound for Vanke, in our view. As delivery of housing projects will likely require a multiyear cycle, we think Vanke’s property development will resume single-digit top-line growth from 2027.