Sales have declined by over 50% compared to the same period last year. Are there any real estate companies still doing relatively well?

According to data from the National Bureau of Statistics, in 2025, the total gross floor area sold of commercial housing nationwide was 881 million square meters, representing a cumulative decline of more than 50% from the historical peak of 1.79B square meters in 2021. According to institutional monitoring, year-over-year prices of new homes on the same plot in 34 key cities fell 31% from their peak, and were down 10% year over year.

Against this backdrop, losses for property developers have become the norm. Recently, major real estate companies have successively released their 2025 financial reports. Most of the leading developers are still making losses; Vanke’s loss of 88.56B yuan once triggered a shock across the real estate sector.

The former star performer stepped off the stage—gone are the cheers, leaving only lingering regret and sighs. In just a few years, the incremental market has ended; the stock market has arrived. The real estate industry has gone through an unprecedented market clearing. In the TOP10 property developers list by sales in 2021, today, there are only four “central state-owned enterprises under the ‘招保中华’” plus one private enterprise—Longfor.

Fortunately, these surviving developers have all found a way to keep themselves alive amid the industry-wide tide of losses.

Property developers’ share of balanced development business

In 2025, central and state-owned enterprises still mainly focus on heavy-asset development, with their shares generally above 85%. Poly Development’s real estate business share is 90%, Country Garden China (Green City China) is about 96%, China Overseas Land & Investment’s share is 93.3%, China Resources Land’s share is 82%, China Merchants Shekou’s share is 88%. And having an excessively high share of real estate business is both an advantage and a risk.

And for heavy-asset real estate development, land acquisition is a must. Only, compared with the “splurge” at land auctions more than a decade ago, developers have become increasingly rational about acquiring land. Public information shows that the top five by land acquisition amount are all “national teams.” The top two are China Overseas Land & Investment and Poly Development. Next are Country Garden China (Green City China), China Resources Land, and China Merchants Shekou. Their land acquisition amounts are 90.7 billion yuan, 67.1 billion yuan, 59.2 billion yuan, 58.5 billion yuan, and 51.4 billion yuan, respectively. Country Garden China is the only non-central SOE developer, but its largest shareholder is China Communications Construction Group (CCCC), which is a central SOE—so it also has central SOE credentials.

With the overall real estate industry cooling down, most private developers have paused land acquisition. Longfor is one of the few private developers that continued to acquire land. In 2025, it obtained seven land parcels in high-tier cities such as Shanghai, Shenzhen, Suzhou, Chongqing, and Chengdu. And compared with the market contraction and focus on land acquisition, Longfor has spent more effort on inventory reduction. By the end of 2025, Longfor’s on-hand inventory had been reduced by 21 billion yuan versus the beginning of the period; throughout the year, it cleared 78 projects and drove the full refresh of 14 stock projects, achieving over 6 billion yuan in sell-through.

In fact, many developers today are diversifying, gradually reducing the share of their real estate business. For example, Longfor’s real estate business revenue share was high previously: in 2021, the real estate business revenue share reached 90.4%. But in the following years, its real estate business share kept falling; in 2025 it has dropped to 72.5%. The decline in the real estate business revenue share indicates that, besides real estate, Longfor’s other businesses have risen rapidly. Diversification has also given Longfor greater capacity and confidence to withstand risks.

Today, many developers are diversifying and gradually lowering the share of their real estate business. Longfor has placed importance on operations and services since early on, insisting that annually collected cash from sales be kept as the upper limit at 10%, and investing in holding-type properties. Now it has formed a new layout in which the three major business segments—development, operations, and services—advance in parallel.

In 2025, Longfor achieved attributable net profit of 1.02 billion yuan. Of this, operations and services achieved core attributable net profit of 7.92 billion yuan, becoming the main source of profit.

Debt reduction enters deep waters

The bottoming cycle of the real estate market has not ended yet, and developers’ debt risk has entered a deep market-clearing phase.

Major developers are actively reducing debt, but some do it smoothly while others do not. Central and state-owned enterprises are relatively steady. Through methods such as reducing short-term debt plus low-interest refinancing and replacements, they cover maturing debt with operating cash flow, with very little reliance on restructuring. They stabilize the structure and optimize costs, building a solid safety foundation. However, overall, the effects of “debt pressure reduction and deleveraging” for central and state-owned real estate enterprises are not very obvious. The total scale of interest-bearing liabilities is still growing or remains at a high level of consolidation, showing the features of “stable yet secretly increasing, structural divergence, and rolling over by replacing old debt with new debt.”

The core problem is that the debt scale is hard to reduce, and pressure remains. Although the industry is in a deep adjustment period and many leading developers loudly call for “reducing liabilities,” the latest financial report data show that the total interest-bearing liabilities of central and state-owned real estate enterprises have not contracted meaningfully. Some companies even grew against the trend. Poly Development’s interest-bearing liabilities at the end of 2025 were about 385.8 billion yuan. While the leverage ratio decreased slightly, the absolute scale still ranks among the top in the industry. Moreover, to support sales and investment, the total debt has not been reduced significantly.

Vanke’s interest-bearing liabilities at the end of 2025 were 358.48 billion yuan, which did not decline but increased versus 2024. Its net debt-to-equity ratio rose to 123.5%, relying on shareholder loans and debt extensions to maintain itself. China Merchants Shekou’s interest-bearing liabilities in 2025 exceeded one trillion yuan, with a net debt-to-equity ratio of 72.46%. Against the backdrop of a 10.6% decline in sales and a 74.65% decline in profit, the debt scale still remains rigid. Because large central SOEs have massive scales, the difficulty of reducing debt is not small, and some companies’ liability scales even increased slightly.

(Data source: 2025 interim reports and third-quarter reports)

For at-risk private developers such as Country Garden, Sunac China, and Fantasia Holding Group, the only option is to achieve “substantive resolution of difficulties” through restructuring and debt reduction. This involves restructuring both domestic and overseas debts and asset disposal, achieving significant debt reduction through debt-to-equity swaps and principal write-downs. In 2025, 21 at-risk real estate companies completed restructurings, with a total debt-reduction scale of about 1.2 trillion yuan, accelerating the clearing of industry risk.

There are also a number of stable private developers that proactively reduce liabilities and strengthen cash flow, focusing on transformation for the long term. Longfor is a typical example. Since 2023, Longfor has adhered to driving business growth with positive operating cash flow, building a sustainable development “base” with a safe and stable debt structure. In 2025, Longfor Group generated a net inflow of 5.8 billion yuan of operating cash flow including capital expenditures, which is already the third consecutive year that Longfor Group has achieved positive operating cash flow including capital expenditures.

Having positive operating cash flow is of great significance for resolving its own debt risk. Thanks to this, Longfor also has solid financial fundamentals. In 2025, Longfor repaid—on schedule/early—the total debts of 22 billion yuan, including domestic credit bonds, China Bond Credit Enhancement bonds, and overseas credit loans. By the end of 2025, Longfor’s interest-bearing liabilities decreased from about 210 billion yuan in mid-2022 to 152.81 billion yuan in 2025. Over a little more than three years, it cumulatively reduced by nearly 60 billion yuan. Among them, in 2025 alone it reduced by 23.51 billion yuan, a decrease of 13%.

Overall, real estate debt reduction has moved from a “passive extension to buy time” stage into a “proactive debt reduction and systematic repair” stage. Domestically, measures are more gentle; overseas, they cut more harshly. With “debt-to-equity swaps + using assets to offset debts + extending and reducing interest rates” as the standard package, central and state-owned enterprises rely on support from shareholders and policy to “stabilize liabilities and free up scale,” while private companies rely on deep debt reduction to “plan transformation.” The ultimate goals for both are to survive and restore operations. Compared with most developers’ “scrambling to roll over and survive,” Longfor appears comparatively composed in its approach to debt reduction.

Steady model student

The real estate industry is currently undergoing deep adjustment and reshuffling. With market sales declining, investment shrinking, and debt risks soaring, most developers are still struggling amid liquidity crises and deleveraging. The industry’s “the survivors rule” pattern is accelerating. Against this backdrop, Longfor Group’s 2025 financial report stands out as a bright spot against the trend. With its steady finances and diversified business advantages, it has become a steady benchmark among private developers—and even across the entire industry.

According to the financial report, in 2025 Longfor achieved revenue of 97.31 billion yuan. Of this, revenue from operations and services reached 26.77 billion yuan, setting a record high. It contributed core profits of 7.92 billion yuan, with a gross margin above 50%, becoming the “stabilizing ballast” for crossing cycles. The commercial rental occupancy rate remained stable at a high level of 97%. Asset management, property services, smart construction/enablement (smart “provisioning”) and other businesses continued to expand. Its diversified earnings structure effectively hedged volatility in development business.

Of course, debt safety is Longfor’s biggest confidence. Its average financing cost fell to 3.51%, a new industry low. The maturity of its debt was extended to 12.12 years. Debt due in 2026 is only 6.1 billion yuan. With positive operating cash flows for three consecutive years, it has basically eliminated hidden risks from the debt crisis.

Amid the industry’s large reshuffle—high-leverage private developers being cleared out and some central and state-owned enterprises facing pressure on liabilities—Longfor, thanks to forward-looking risk management, a healthy debt structure, and strong non-development business, has taken the lead in stepping out of the adjustment period. Going forward, as the industry gradually stabilizes, Longfor will continue to seize market share based on its solid fundamentals, with an optimistic outlook for long-term development.

A low debt-to-liability ratio is Longfor’s safety bottom line. It keeps Longfor away from the risks of default and liquidity exhaustion. Without needing painful debt-reduction measures such as extensions, cutting debt, or debt-to-equity swaps, it can maintain operational independence and good credit standing. This is the fundamental reason a developer can survive. A low debt-to-liability ratio also brings financing advantages. Lower financing cost, longer maturities, and more stable channels mean that when industry financing tightens, it can still secure more financial resources and form a virtuous cycle. This provides Longfor with the ability to withstand the cycle, and will also push Longfor to complete the transformation of its business structure ahead of schedule.

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Author | Meng Xiao

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