China Overseas Land & Investment's Way Through Cycles: Balanced Offense and Defense, Organic Growth

On March 31, China Overseas Land and Investment Limited (0688.HK) released its 2025 annual results, with total sales contracts amounting to 251.23 billion yuan, ranking second in the industry. Its rights sales continued to lead the industry, with core net profit attributable to the parent company of 13.01 billion yuan, ranking second in profitability across the sector. Operating cash inflow was 16.73 billion yuan, and at the end of the period, cash holdings reached 103.63 billion yuan.

Balanced offense and defense: dual-core dominance in residential and commercial sectors

With ample cash reserves, China Overseas Land and Investment demonstrates strong investment capabilities. In 2025, China Overseas Land’s land investment ranked first in the industry for three consecutive years, with a total of 118.69 billion yuan in new land investments for the year, and rights-based land purchases totaling 92.42 billion yuan. Among these, rights-based land purchases in Hong Kong, Beijing, Shanghai, Guangzhou, and Shenzhen accounted for 73.9%. As of the end of 2025, China Overseas Land (excluding China Overseas Hongyuan) had a total land reserve of 25.28M square meters of gross floor area, with a rights-based area of 22.86M square meters. Of the land reserves, first-tier and strong second-tier cities combined accounted for 86.5%, with a high-quality structure that fully supports sustainable future development.

Despite the overall industry still undergoing adjustment and cleanup, China Overseas Land has taken a “counter-cyclical” investment approach, defying the trend, while maintaining stable financial performance. Compared to the “three red lines” standards, China Overseas Land remains in the “green zone,” with all indicators performing well. Its asset-liability ratio is 54.1%, among the lowest in the industry, with a net debt ratio of 34.2%. The weighted average financing cost is 2.8%, continuing to be the lowest in the industry. China Overseas Land is the only domestic listed real estate company rated “A-” by two international credit rating agencies—Fitch Ratings and S&P Global Ratings.

According to research by China Merchants Securities, since 2016, the company’s average financing cost has steadily declined from 4.76% in 2016 to 3.10% in 2024, further decreasing to 2.90% in 2025. In comparison, the company’s financing costs are relatively low among major real estate firms. China Merchants Securities noted that capital is the “productivity” of the real estate industry, and lower financing costs give the company advantages in land acquisition and sales operations.

What underpins China Overseas Land’s confidence? Its “offensive” in the residential market and “defensive” stance in commercial real estate complement each other, forming a comprehensive strategy. Looking at commercial real estate:

In 2025, commercial operation revenue reached 7.2 billion yuan, fully covering the company’s total interest expenses. The dual-core income from shopping centers and office buildings accounted for 81%, with a continuously optimized asset structure. Revenue from projects in first-tier and new first-tier cities increased to 78%, further highlighting the core asset “ballast” effect. During the year, China Overseas Commercial REIT (180607.SZ), a closed-end infrastructure securities investment fund, successfully listed on the Shenzhen Stock Exchange. It is the first consumer REIT in mainland China based on a “buy-renovate-boost-activate” model, marking the formation of China Overseas Land’s full-cycle asset management capabilities—covering investment, financing, construction, management, and divestment.

Internal drivers: refined operations and digital system innovation

What is the secret behind China Overseas Land’s balanced offense and defense? Analyzing the company’s cost control, supply chain development, digital management, and more reveals a strong “foundation” supporting its leading performance—quietly underpinning operations and investments.

Cost control is key, achieved through refined operations. In the 2025 annual report, China Overseas Land’s combined selling and administrative expenses accounted for only 3.8% of revenue, compared to an average of 4.89% among 50 sample real estate companies. Its 3.8% is about 1.1 percentage points lower than the industry average, demonstrating a clear cost advantage.

Supply chain integration involves low-cost procurement of high-quality raw materials across the entire chain. China Overseas Land establishes long-term partnerships with suppliers to reduce raw material costs; it also standardizes construction processes to minimize waste. Its Shenzhen-based Lingchao Supply Chain integrates hundreds of upstream and downstream partners, creating an open, transparent, high-efficiency B2B trading platform. This platform not only serves China Overseas Land but is also open to the entire industry, using digital tools to optimize building material supply chain management, reduce coordination costs, and improve overall industry efficiency.

China Overseas Land has developed a “full lifecycle digital management platform” covering residential, office, shopping centers, and all business formats, achieving “horizontal coverage and vertical depth” in digital management. Applied across projects nationwide, it enables precise, quantitative management of all development and operation activities, improving efficiency and allowing timely correction of management deviations.

In 2025, China Overseas Land was awarded the IDC “AI and Generative AI Leader” prize for its “Big Model-based Real Estate Intelligent Business Collaboration Platform.” This platform integrates massive real estate data to train a proprietary large model, deeply embedded with core business systems. Business personnel can quickly build AI applications without technical backgrounds, covering investment, design, construction, and operation processes. Efficiency in core business workflows improved by over 40%, and cross-department data sharing increased by 60%.

In construction, China Overseas Land uses the “HaiZhu” project management system to digitalize and standardize the entire engineering process, with nearly 3,000 on-site inspection issue categories, over 80 measurement and quality check items, and more than 100 key process acceptance standards.

For organizational efficiency, the company has built the “China Overseas Connect” platform in collaboration with Feishu, digitizing and standardizing processes such as project change management and inquiry procurement. For example, using Feishu for project change management can save nearly 300 hours of manual work per project, greatly improving organizational collaboration.

China Overseas Land’s internal transformation—from cost and expense control to supply chain development and digital innovation—is not a single-point breakthrough in one dimension but a systemic change involving strategy, platforms, technology, business, and organization. Through deep R&D and practical experience in frontline construction, development, and marketing, China Overseas Land continues to iterate and innovate, building a new ecosystem for the real estate industry.

“Good houses” by China Overseas: from “face” to “inside,” solving pain points

In 2025, China Overseas Land sold contracts totaling 125.44 billion yuan in Hong Kong, Beijing, Shanghai, Guangzhou, and Shenzhen alone, enough to rank seventh among all real estate companies in sales for the year. This “top of the first-tier” performance makes China Overseas Land truly deserving of the title “King of First-Tier Cities.” Its “good houses” are undoubtedly the main driver.

China Overseas’ R&D team conducts in-depth customer insights through home visits, owner interviews, big data analysis, and more. They identify customers’ “latent needs” by surveying 33k households, distilling high-frequency pain points, and transforming them into a “Six Nos, Six Fears, Three Reflections, and Three Essentials” demand framework. Based on this framework, China Overseas Land employs the “Five Goods” system—good standards, good design, good materials, good construction, and good service—to systematically address issues.

The company launched the “China Overseas Good House Living OS” system, a digital infrastructure and integrated, intelligent customization platform that builds a spatial smart ecosystem. It includes 16 major product systems to meet comprehensive customer needs, solving traditional pain points like soundproofing and leakage, and enhancing the home experience through whole-house inspections, smart energy, health living, and other systems, making homes a sustainable, upgradeable smart terminal.

Through Living OS, China Overseas Land achieves “real-time response” to customer needs. The first “China Overseas Good Houses” projects, such as Wanjiyu in Beijing and Yundi Juzhang in Shanghai, have been launched and are experiencing strong sales despite market headwinds.

With its “engineering gene” empowered by digitalization, China Overseas Land systematically addresses customer pain points from “face” to “inside,” combining solid fundamentals with intelligent enhancements, making “good houses” truly deserving of the name and bringing warmth to better living. In the first quarter of 2026, China Overseas Land achieved contracted sales of 51.51 billion yuan, an 11% year-over-year increase, with rights sales continuing to rank first in the industry.

Commercial operations: strategic focus on “dual engines” layout

In 2025, China Overseas Land’s commercial real estate generated 7.2 billion yuan in operating income, fully covering the group’s total interest expenses. In an environment where the industry’s second growth curve is weakening, China Overseas Commercial remains steady and resilient.

The company’s commercial strategy centers on focus. In 2025, China Overseas Land adhered to the “focusing on mainstream cities” approach, with new commercial projects located in core areas of first-tier and strong second-tier cities (such as Beijing, Shanghai, Shenzhen, Foshan). For example, projects like Beijing Zhonghai Daji Alley (Xicheng District) and Foshan Yingyue Lake Huanyu City are situated in city core commercial zones or densely populated areas, leveraging regional consumption power and transportation convenience to achieve high occupancy rates (96% in Beijing Daji Alley) and high foot traffic (over 200k visitors on opening day).

Secondly, the “dual-engine” layout features shopping centers and office buildings as two wings. The office segment, with 59 Grade-A office buildings (the largest office developer domestically), maintains industry-leading rental income; the shopping center segment, with standardized products like the Huanyu series (Huanyu City, Huanyu Fang, Huanyu Hui), enables rapid replication. In 2025, over 60% of newly operated commercial projects are shopping centers, becoming a key driver of revenue growth.

Third, refined operations empower the business. Through “one store, one policy” branding adjustments and space upgrades, project competitiveness is enhanced. For example, after renovation, the rent at Beijing Huanyu Hui increased by 32%; Foshan Yingyue Lake Huanyu City (formerly Nanhai Yifeng City) optimized layout and introduced popular brands, becoming a new consumption landmark in the Yingyue Lake area.

Additionally, in 2025, China Overseas Commercial built an asset capital cycle through “investment, financing, management, and divestment,” exemplified by the successful listing of Huayu Zhonghai Commercial REIT (180607.SZ). This was China’s first consumer infrastructure REIT based on a “buy-renovate-boost-activate” model, with Foshan Yingyue Lake Huanyu City as the underlying asset. It took only four years from acquisition to listing, achieving a 117.81% asset appreciation rate and setting a record for retail infrastructure REIT subscriptions (public subscription multiple of 361.9 times). This asset securitization success established a benchmark for future commercial real estate financing and asset management.

China Overseas’ excellent performance in development and operations creates a “dynamic-static” dual-brand effect, mutually reinforcing and mutually benefiting, forming a comprehensive overall advantage.

Conclusion

2026 marks the conclusion of the “14th Five-Year Plan” and the start of the “15th Five-Year Plan.” The real estate sector has undergone adjustment and cleanup, entering the second half. China Overseas Land remains confident that the market will continue to be a trillion-yuan-level giant each year, entering a new stage of high-quality development during the “15th Five-Year Plan.” With its strategic “dual-drive, optimized ecosystem” business model, focusing on core real estate development and operation, maintaining a balanced approach to leasing and sales, and building an integrated industry chain, China Overseas Land aims to lead innovation and achieve steady, sustainable growth in high-quality real estate development.