After years of turmoil, hedge funds, including Shanghai Chongyang Investment Management and Golden Nest Capital, are beginning to bet on a sector-wide turnaround in China’s long-suffering property market amid improving fundamentals and government support, according to a report by Reuters.
Recent indicators — including rising home prices in top-tier cities and a state-backed bailout of leading developer China Vanke — suggest that 2024 could mark a turning point. While investors remain selective, many are positioning themselves in state-backed developers and China’s largest online property brokerage, expecting substantial upside.
“We have added some large state-owned developers recently, based on the logic of sector turnaround and a ‘winners take all’ scenario,” said Wang Qing, Chairman of Shanghai Chongyang Investment Management, which manages $5bn.
According to Wang, land sales in major cities are recovering, and only a handful of developers are actively acquiring plots — suggesting that market consolidation is benefiting the strongest players.
Hong Kong-based Golden Nest Capital is taking a similar approach. “You could say that new home sales have halved, but the number of developers has declined even more,” said Stanley Tao, CIO at Golden Nest Capital Management. As the market stabilises, he believes leading developers could see a significant rebound.
The shift in sentiment marks a stark contrast to the past three years, when the heavily indebted sector was a top short-selling target and firms like Evergrande and Sunac China collapsed. Now, investors are eyeing opportunities as Beijing rolls out sweeping measures to stabilise the housing market.
KE Holdings, China’s largest online real estate platform — often compared to Zillow — has emerged as a major hedge fund target, with the company benefiting from strong secondary home sales in China’s biggest cities and advances in real estate technology, according to CViti property analyst Griffin Chan.
Hong Kong’s $9bn Aspex Management built a new position in KE Holdings, adding 6.51 million US-listed shares in Q4 2024, valued at roughly $120m by year-end, according to SEC filings. Meanwhile, WT Asset Management, which oversees $4bn, increased its stake by 2.2 million shares, worth over $40m.
Investor sentiment received another boost in February when China’s government-backed restructuring of top homebuilder Vanke reduced fears of another major default.
Shares of KE Holdings and other real estate stocks staged a sharp rebound that month, though many are still trading at deep losses, having plunged more than 80% over the past three years.
