According to the China Index Academy, total bond financing in the real estate sector saw year-on-year growth in the first half of 2026, stabilizing from a low base. However, the root cause of the sustained decline in developer financing in the past was continuous deleveraging driven by a weakening market, meaning this stabilization is not firmly established.
Credit bonds remain the dominant financing tool, with state-owned enterprises (SOEs) leading issuance, particularly local government-backed firms which saw a notable increase in issuance volume. Overseas bonds grew from a low base but still represent a small share. The first batch of commercial real estate REITs were successfully listed, and the share of ABS financing rose, with asset-backed securities like CMBS/CMBN and quasi-REITs accounting for nearly 80% of total issuance.
Bond Financing Volume: Over 20% Year-on-Year Growth in First Half, Stabilizing from a Low Base
In the first half of the year, total bond financing volume grew year-on-year, showing signs of stabilization. Due to the low base effect, the year-on-year growth rate turned positive. While monthly figures fluctuated, the cumulative volume maintained positive growth. However, this stabilization is not solid. First, a significant portion of funds raised is used to repay existing debt, so issuance volume is heavily influenced by debt maturities. Second, issuance requires existing projects or underlying assets, limiting scale to high-quality assets. The historical decline in developer financing stemmed from market-driven deleveraging. As the real estate market continues to bottom out, bond financing remains constrained.
Credit Bonds Remain the Dominant Financing Tool; Overseas Bonds Recover from Low Levels; ABS Accounts for Nearly 40%
From January to June 2026, total bond financing in the real estate sector reached 315.88 billion yuan, up 21.7% year-on-year, the fastest growth rate in recent years. By structure, credit bond financing totaled 176.61 billion yuan, up 11.8%, representing 55.9% of the total. Overseas bond financing was 17.17 billion yuan, up 199.4%, accounting for 5.4%. ABS financing amounted to 122.10 billion yuan, up 27.5%, making up 38.7%.
Looking at funds available to developers, the scale continued its decline since 2022, indicating the actual financing environment has not significantly warmed. In the first half of 2026, funds available to developers totaled 4,023.3 billion yuan, down 20.2% year-on-year. Of this, domestic loans fell 31.7% to 571.6 billion yuan; self-raised funds dropped 16.4% to 1,474.0 billion yuan; deposits and advance receipts decreased 15.8% to 1,244.2 billion yuan; and individual mortgage loans declined 24.9% to 513.7 billion yuan.
Financing Structure: Credit Bonds Still the Absolute Mainstay; SOEs Lead Issuance
In 2026, credit bond issuance in the real estate sector was 177.61 billion yuan, up 11.8% year-on-year, accounting for 55.9% of total bond financing, down 5.0 percentage points from the same period last year. The average issuance term was 3.44 years, a slight shortening. Monthly issuance fluctuated during the first half. By issuer type, central and local SOEs dominated, with their share of credit bond issuance reaching 95.3%, up from the previous year. The share of private and mixed-ownership enterprises declined. Local SOEs saw a significant increase in credit bond issuance in the first half of 2026, with companies like Shoukai and Shouchuang issuing over 10 billion yuan each, and Suzhou Gaoxin, Lujiazui, and Zhonghua Enterprise issuing over 4 billion yuan each. This growth in local SOE issuance drove the overall increase in developer credit bonds. Private enterprise bond issuance remained low, with only six private and mixed-ownership firms issuing bonds, mostly large companies that have not defaulted, failing to benefit most cash-strapped private developers.
Poly Developments and Holdings Group plans to issue convertible bonds to specific investors, raising up to 5 billion yuan for nine development projects in core cities like Shanghai, Hangzhou, Guangzhou, and Foshan. This has received approval from the China Securities Regulatory Commission. Long-term funds with equity characteristics will help improve the company's balance sheet.
Overseas Bonds: Growth from a Low Base, Still a Small Issuance Volume
In 2026, overseas bond issuance was only 17.17 billion yuan in RMB terms, showing significant year-on-year growth, accounting for 5.4% of total financing, up 3.2 percentage points. The average issuance term was 3 years, a relatively long duration. Issuers were primarily central and local SOEs and high-quality private and mixed-ownership enterprises like Yuexiu, China Overseas Grand Oceans, Greentown, and Seazen, whose increased issuance drove industry volume.
ABS: Share of Financing Rises; CMBS/CMBN and Quasi-REITs Account for Nearly 80%
In 2026, ABS financing accounted for 27.5% of total bond financing, up 1.7 percentage points year-on-year, becoming increasingly important. The average issuance term was 17 years, a significant extension. Monthly ABS issuance fluctuated considerably in the first half, influenced by policy direction and the availability of quality assets. By structure, quasi-REITs and CMBS/CMBN were the main types, accounting for 41.6% and 36.3%, respectively.
The commercial real estate REIT pilot program was launched, with the first batch successfully listed, increasing options for unlocking commercial assets. On December 31, 2025, the China Securities Regulatory Commission issued a policy clearly stating its aim to "promote the stable and healthy development of commercial real estate REITs," noting it is a key measure to support a new model for real estate development. The policy emphasized supporting assets with commercial attributes and encouraged REITs to hold portfolios with similar property types, complementary functions, or operational synergies. In June, the first four commercial real estate REITs were listed, with underlying assets located in core cities like Beijing, Shanghai, and Xi'an, covering outlet malls, office buildings, and mixed-use complexes. Original owners included Shounong, Shanshan, Shazhichuan, and Shanghai Real Estate, covering local state-owned and private enterprises. To date, 22 commercial real estate REITs have been filed, with the industry expecting total fundraising to exceed 70 billion yuan, further revitalizing existing commercial assets.
Hold-type real estate ABS products are also accelerating. The "CITIC Securities - China Resources Commercial Assets Hold-type Real Estate Asset-backed Special Plan" was established, and the "Guojin Asset Management - Wuyue Plaza Hold-type Real Estate Asset-backed Special Plan" was upsized. Overall, ABS products this year remain dominated by those backed by high-quality underlying assets, with the channel remaining open to enterprises holding quality assets.
Conclusion: Multi-Layered REIT Market Takes Shape; Refined Operations Are Key
As industry financing inflows shift from entity-based to project-based, linking debt repayment to specific projects and addressing the maturity mismatch of past upcycles, mechanisms like the "whitelist" and public REITs are accelerating. On January 9, regulators issued new guidance for the real estate financing coordination mechanism, allowing loans under the "whitelist" system to be extended up to 5 years if conditions are met. It is expected that domestic loans under this system will remain a crucial support for developer funding.
The implementation of commercial real estate REITs in the first half of the year has fostered a dual-driver public REIT market of "traditional infrastructure + commercial real estate," complemented by hold-type real estate ABS, forming a multi-layered REIT system. This development has completed the "investment, financing, construction, management, and exit" value chain for real estate, opening up space for professional operators and laying a foundation for a new development model. Leading central SOEs and private enterprises are exploring innovative financing channels like public REITs and hold-type real estate ABS, both revitalizing assets and diversifying funding sources. Companies like China Resources, China Merchants Shekou, Jinmao, and China Overseas Land & Investment have already issued public REITs domestically. Meanwhile, developers like Poly Developments, Seazen Holdings, China Merchants Shekou, China Resources Land, and Galaxy Group are actively applying for commercial real estate REITs. REITs create a virtuous cycle of quality credit, stable operations, and refined management, continuously strengthening corporate credit moats.