Cash Flow from Operations at 92 Listed Developers Averages RMB736m; Three Ministries Tighten Pre-sale Rules

During the 2026 interim reporting season, the real estate sector exhibited a financial phenomenon of improved operating cash flow alongside declining overall profitability. According to Wind data, among the 92 listed companies included in the Shenwan real estate development index, the average net cash flow from operating activities rose to RMB736m from RMB316m in the same period of 2025, with the median also increasing. However, the overall profit performance of these 92 developers continued to deteriorate.

Leading developers by sales scale, including China Vanke A, Greenland Holdings, China Merchants Shekou, and Binjiang Group, all turned their operating cash flow from negative to positive. Among them, China Merchants Shekou posted the largest swing, moving from a net outflow of RMB2 billion in the same period of 2025 to a net inflow of RMB24.1 billion. Among the aforementioned developers, only Greenland Holdings saw its net profit attributable to shareholders improve, and that improvement was a narrowing of losses.

The divergence between profit and cash flow is related to accounting rules and adjustments in developers' operating strategies. Profit is recognized on an accrual basis, while cash flow reflects actual receipts and payments. Under the pre-sale system, pre-sale proceeds received during the year are recorded as contract liabilities and are not included in current-period profit; current-period profit mainly comes from the delivery and settlement of projects whose land was acquired at high prices in earlier years. Leading developers are no longer channeling large amounts of sales proceeds into land purchases, moderately controlling payments to suppliers and disposing of some low-efficiency projects, which also boosted operating cash flow. For example, China Vanke reduced its inventory by RMB27.8 billion in the first half, mainly due to the sell-through of completed and in-progress projects, as well as an additional RMB3.94 billion provision for inventory impairment; the scale of land intended for development did not decline. On the expenditure side, the company continued to cut various costs, and new project acquisitions were mainly achieved through land revitalization and similar methods.

On August 28, the Ministry of Housing and Urban-Rural Development and two other ministries jointly issued the Notice on Improving the Commodity Housing Sales System, while the People's Bank of China and other authorities simultaneously released supporting reforms for financing. The core of the new policy on reforming the pre-sale system lies in two aspects: raising the pre-sale threshold and promoting the sale of completed homes in an orderly manner. For commodity housing projects on newly transferred land and projects on already transferred land that have not yet obtained a construction project planning permit, sale of completed homes is given priority. Previously, sale of completed homes had been in a local pilot phase; according to third-party statistics, since 2024, six provinces and 32 cities have promoted related plans, with varying progress across regions. To match the reform of the pre-sale system, financial regulators issued policies centered on the project company system and the lead bank system, shifting bank credit focus toward the project level and enabling more financing tools to be deployed at project companies.