https://www.straitstimes.com/opinion/china-is-waking-up-from-its-property-nightmare

This article provides a detailed analysis of China’s property market recovery, suggesting that the country’s prolonged property crisis may be nearing an end. Here are the key points:

Signs of Recovery

The most striking indicator is the sale of a luxury mansion in Shanghai’s Changning district, which sold for 270 million yuan ($48.2 million) at auction – one of the priciest home auctions in recent memory. This signals renewed confidence among wealthy buyers.

More broadly, the data shows improvement: new home sales by value fell less than 3% in the first four months of 2025, compared to a 17% decline in 2024. In tier-one cities like Beijing, Shanghai, Guangzhou, and Shenzhen, housing inventory that would have taken nearly 20 months to clear in July 2024 is now down to about 12.5 months.

Economic Context

The property sector’s importance to China’s economy cannot be overstated; it contributed approximately 25% of GDP before the 2020 crash and still represents around 15% today. The crisis had been a significant drag on growth, with 80% of household wealth tied up in real estate in 2021 (now down to 70%).

Government Response

Beijing has implemented several support measures:

Encouraging local governments to buy unused land and excess housing
Providing home purchase subsidies
Planning shantytown renovations that could create demand for one million homes
Cutting interest rates in May to reduce mortgage costs

Regional Variations

The recovery appears uneven across China. While Shanghai and other major cities show signs of stabilization or even price increases, smaller cities like Wenzhou continue to experience sharp price declines, partly due to the trade war’s impact on manufacturing confidence.

Outlook

According to S&P Global projections, first-tier cities are expected to experience flat prices in 2025 and 1% growth the following year, while third-tier cities may face 4% declines in 2025 and 2% growth the following year.

The article suggests that while the crisis may be ending in major wealthy cities, smaller cities with oversupply issues may take longer to recover. The ongoing US-China trade tensions continue to be a complicating factor for overall economic confidence.

China’s Property Market Recovery: Deep Analysis and Singapore Impact

China’s Property Market Transformation

The Crisis Background (2020-2024)

China’s property sector experienced one of its most severe downturns in modern history. The crisis was triggered when Beijing began tightening developers’ access to credit in mid-2020, targeting what had become an unsustainable bubble. Key indicators of the severity:

Property’s GDP contribution fell from 25% (pre-2020) to 15% or less by 2025
Household wealth tied to real estate dropped from 80% (2021) to 70% (2025)
Hundreds of developers collapsed, leaving millions of unfinished units
As many as 80 million flats stood dormant in 2024

Signs of Recovery (2025)

The luxury Shanghai mansion sale for $48.2 million represents more than just a single transaction—it signals a psychological shift in market confidence. Broader recovery indicators include:

Stabilizing Sales Volumes

New home sales declined only 3% in Q1 2025 vs. a 17% decline in 2024
Tier-one cities (Beijing, Shanghai, Guangzhou, Shenzhen) showing inventory normalization
Developer inventory reduced from 20 months (July 2024) to 12.5 months (January 2025)

Government Intervention Strategy

Beijing has deployed a comprehensive support package:

Local government land and housing purchases via special bonds
Home purchase subsidies
One million home shantytown renovation program
Interest rate cuts are reducing mortgage costs
Encouraging secondary market transactions

Market Bifurcation

The recovery is highly uneven across China’s urban hierarchy:

Tier-1 Cities: Stabilization and modest growth expected

Shanghai is showing month-on-month transaction increases
Luxury segment leading recovery
S&P forecasts flat prices in 2025, 1% growth in 2026

Tier-3 and Lower Cities: Continued decline

4% price drops expected in 2025, 2% in 2026
Manufacturing-dependent cities like Wenzhou are still struggling
Oversupply issues persistent

Impact on Singapore’s Property Market

Direct Investment Flows

Historical Chinese Investment Patterns

Chinese buyers have historically been significant players in Singapore’s property market:

Nearly 25% of total foreign property acquisitions during the first three quarters of 2020
Around half of the Chinese buyers live in their flats, while the others use the property for investment
Chinese citizens are predominantly interested in luxury properties

Current Market Dynamics (2024-2025)

Singapore’s cooling measures have begun showing effects:

Foreigners bought 5.3% of non-landed private homes in the Core Central Region in the first nine months of 2024, down from 10.4% in 2023
Private residential prices have increased by 32% over the past five years, with 2024 alone recording a 3.9% growth

Market Implications of China’s Recovery

Short-term Impact (2025-2026)

Reduced Outflow Pressure: As China’s property market stabilizes, the urgent need for Chinese investors to diversify offshore may diminish, particularly for residents of tier-1 cities whore sseeing localarket recovery.
Continued Luxury Demand: Property investors from mainland China are sharpening their focus on Portugal and Singapore as alternative investment locations, suggesting sustained interest despite domestic market improvement.
Wealth Effect Stabilisation: As Chinese household wealth tied to property stabilises, high-net-worth individuals may maintain their investment appetite in Singapore, albeit possibly at a reduced urgency.

Medium-term Structural Changes (2026-2028)

Capital Allocation Shifts

Chinese investors may rebalance portfolios back toward domestic opportunities as confidence returns
Singapore may see a shift from distressed capital seeking safe havens to more strategic, long-term investment
Quality over quantity: fewer but more selective Chinese investments in Singapore’s prime properties

Policy Response Dynamics Singapore’s government has been proactive in managing foreign investment flows:

The GLS program in 2025 is expected to deliver up to 13,000 new units, nearly double the supply in 2024
Continued cooling measures targeting foreign buyers while maintaining market stability

Singapore’s Strategic Position

Comparative Advantages

Singapore remains attractive to Chinese investors due to:

Political stability and strong rule of law
Currency stability and wealth preservation
High-quality urban environment and infrastructure
Strategic location for regional business operations
Foreign capital has spurred the development of new residential projects, particularly those offering luxury amenities and innovative design.

Market Resilience Factors

Survey participants identified interest rate cuts and asset repricing as their main reasons for increasing real estate allocations this year, with CBRE forecasting investment volume to rise by 5-10% y-o-y in 2025

Future Outlook and Strategic Implications

For Singapore’s Property Market

Supply-Demand Dynamics

Limited private residential units are expected to be completed in 2024, with just 2,123 units completed in the first half.
Controlled supply strategy may support prices despite potentially reduced Chinese demand.

Market Segmentation

Luxury segment likely to maintain Chinese interest regardless of domestic recovery
Mid-tier properties may see reduced foreign competition, potentially benefiting local buyers.
Commercial real estate may see continued Chinese institutional investment

Risk Factors

Geopolitical Tensions The ongoing US-China trade tensions mentioned in the original article could drive continued capital outflows from China, maintaining Singapore’s appeal as a safe haven.

Policy Tightening Singapore may need to balance between:

Maintaining attractiveness to foreign investment for economic growth
Ensuring housing affordability for residents
Managing property market stability

Strategic Recommendations

For Chinese Investors

Focus on prime district properties with strong fundamentals
Consider long-term hold strategies rather than speculative plays
Diversify across property types and geographic locations within Singapore

For Singapore Policymakers

Monitor Chinese capital flow patterns closely
Maintain a flexible policy stance to respond to changing dynamics
Continue supply management to ensure market stability
Strengthen ties with Chinese financial institutions for institutional investment

For Local Stakeholders

Developers should prepare for a potentially more selective foreign buyer base.
Local investors may find opportunities in segments with reduced foreign competition.n
Rental market dynamics may shift as Chinese buyer patterns evolve

Conclusion

China’s property market recovery represents a fundamental shift that will reshape cross-border capital flows in Asian real estate. While Singapore experiences some moderation in Chinese investment intensity, the city-state’s structural advantages and ongoing need for international portfolio diversification suggest sustainededalbeitit potentially more selective, Chinese participation in Singapore’s property market.

The key will be Singapore’s ability to maintain its competitive position while managing the domestic implications of foreign investment flows. The recovery in China’s tier-1 cities may actually strengthen Singapore’s position by attracting higher-quality, less distressed Chinese capital seeking strategic international exposure rather than emergency safe-haven investments.

Phoenix Rising: The Story of Meridian Capital’s Recovery

A fictional account of how one Singaporean property firm navigated the Chinese market crisis and emerged stronger

Chapter 1: The Storm Clouds Gather (Late 2022)

The glass walls of Meridian Capital’s Marina Bay office reflected the setting sun as CEO Sarah Lim stared at the latest reports from their China desk. What had started as whispers about Evergrande’s troubles two years earlier had become a thunderous roar that was now threatening to topple her carefully built property investment empire.

“The Shanghai fund is down another 15% this quarter,” reported David Chen, Meridian’s Chief Investment Officer, his usually steady voice betraying a hint of concern. “Our Beijing residential portfolio hasn’t seen a single transaction in three months.”

Sarah had built Meridian Capital from a small family office in 2010 into one of Southeast Asia’s most successful cross-border property investment firms. With S$2.8 billion in assets under management, they had ridden the wave of Chinese economic growth, channelling Singaporean capital into China’s booming property markets while simultaneously attracting Chinese high-net-worth individuals to Singapore’s premium real estate.

Now, that strategy was unravelling.

“What’s our total exposure to China?” Sarah asked, though she already knew the answer would be painful.

“Forty-three cents of AUM,” David replied quietly. “S$1.2 billion.”

The room fell silent. In the space of eighteen months, China’s property market had transformed from Meridian’s crown jewel into its most significant liability. Their flagship Shanghai Luxury Residences Fund, which had delivered 18% annual returns for five consecutive years, was now haemorrhaging investor capital. Chinese clients who had once eagerly snapped up Singapore’s premium condominiums had virtually disappeared, their wealth tied up in plummeting domestic property values.

“We need a new strategy,” Sarah declared, her voice regaining its characteristic determination. “And we need it fast.”

Chapter 2: The Darkest Hour (2023)

By early 2023, Meridian Capital was on the brink of survival. The firm had laid off 30% of its staff, closed its Beijing office, and watched helplessly as its China-focused funds became almost impossible to exit.

“We’re haemorrhaging S$50 million per quarter,” CFO Patricia Wong reported during a sombre board meeting. “At this rate, we’ll be forced into liquidation by year-end.”

The Chinese investors who had once formed the backbone of their Singapore operations had vanished. Foreign buyer activity in Singapore’s Core Central Region had plummeted from historic highs, and Meridian’s property marketing arm was struggling to find buyers for the luxury developments they had pre-committed to promote.

But Sarah Lim wasn’t ready to surrender. Late one evening, as she walked through the eerily quiet office where her remaining team of 45 employees worked with grim determination, an idea began to form.

“What if we’re looking at this all wrong?” she mused to David, who was hunched over financial models at his desk. “Everyone’s treating China’s property crisis as a catastrophe. But what if it’s an opportunity?”

David looked up, exhaustion evident in his eyes. “Sarah, with respect, how can losing 60% of our portfolio value be an opportunity?”

“Think about it,” Sarah continued, her excitement building. “Chinese wealth isn’t disappearing—it’s just trapped. These high-net-worth individuals still need to diversify internationally. They’re just more cautious now. And in China, distressed assets are going to create opportunities that won’t exist for another generation.”

Chapter 3: The Pivot Strategy (Mid-2023)

Sarah’s insight led to a radical repositioning of Meridian Capital. Instead of retreating from China, they would double down—but with a completely different approach.

Phase 1: Distressed Asset Acquisition Working with local partners who had survived the property carnage, Meridian began quietly acquiring distressed assets in Shanghai and Shenzhen at 40-50% discounts to their 2021 values. But they weren’t buying ordinary residential properties—they focused on trophy assets in prime locations that would retain long-term value regardless of market cycles.

“We’re not trying to catch a falling knife,” Sarah explained to her sceptical board. “We’re buying generational assets at once-in-a-lifetime prices.”

Phase 2: Relationship Banking Meridian transformed from a traditional fund manager into a family office service provider for Chinese ultra-high-net-worth individuals. They offered comprehensive wealth management services, helping clients navigate capital controls while legally diversifying their assets internationally.

“We became their trusted advisors, not just their fund managers,” recalls relationship manager Lisa Tan. “Chinese families needed someone who understood both markets intimately and could help them preserve wealth across jurisdictions.”

Phase 3: The Singapore Sanctuary Strategy.. Instead of chasing volume in Singapore’s property market, Meridian focused on creating exclusive investment opportunities for its Chinese clients. They partnered with premium developers to offer off-market opportunities and provided concierge services that went far beyond traditional property transactions.

Chapter 4: The Green Shoots (Early 2024)

By early 2024, Meridian’s contrarian strategy was beginning to show results. Their distressed asset acquisitions in China were ststabilizingand they had rebuilt their Chinese client relationships on a foundation of trust and comprehensive service, rather than relying solely on pure investment returns.

“We’re seeing something interesting in our Shanghai portfolio,” David reported during a quarterly review. “Transaction volumes are still low, but the assets we bought are getting serious inquiry calls for the first time in eighteen months.”

More importantly, their repositioning in Singapore was gaining traction. Chinese families, who had been paralyzed by their domestic property losses, were beginning to cautiously diversify again; however, they now demanded much more sophisticated advisory services.

“The clients coming to us now are different,” observed private client advisor Jennifer Wu. “They’re more educated about risk, more selective about opportunities, and they want partners they can trust for the long term, not just this transaction.”

Meridian’s assets under management had stabilized at S$1.8 billion—smaller than their peak, but with a more sustainable and diversified base.

Chapter 5: The Luxury Signal (May 2025)

The phone call came on a Tuesday morning in May 2025. Sarah was reviewing architectural plans for a new service apartment project when her assistant announced that a Chinese contact was calling about “something urgent and exciting.”

“Sarah, you need to get on a plane to Shanghai immediately,” Jenny Wang, Meridian’s local partner, said. “One of our assets just became the talk of the city.”

The property in question was a German-style villa in Shanghai’s Changning district that Meridian had acquired through its distressed asset program in late 2023 for 180 million yuan. They had spent another 15 million yuan on renovations, working with the original German architects to restore its pre-war elegance.

“It sold at auction yesterday for 270 million yuan,” Jenny continued, her excitement palpable. “S$48.2 million. The Chinese media is calling it a signal that the luxury market is back.”

Sarah felt a familiar surge of adrenaline. This wasn’t just about one property sale—it was validation of their entire contrarian strategy. They had bought quality assets at distressed prices and held them through the worst of the crisis. Now, as confidence began to return, their patience was being rewarded.

“Book me on the next flight to Shanghai,” Sarah told her assistant. “And call an all-hands meeting. I think our turnaround story is just beginning.”

Chapter 6: The New Equilibrium (Late 2025)

By the end of 2025, Meridian Capital had not only survived the Chinese property crisis but had positioned itself for the next phase of cross-border investment between China and Singapore.

China Recovery Play.. Their distressed asset portfolio was now valued at 120% of their acquisition cost, generating the first positive returns for investors in three years. More importantly, they had established themselves as one of the few foreign firms with deep local knowledge and strong relationships in China’s recovering tier-1 city markets.

“We’re not just buying properties now,” explains portfolio manager Michael Ng. “We’re partnering with Chinese developers on mixed-use projects, urban renewal initiatives, and sustainability-focused developments. The market has matured, and so have we.”

In Singapore, Meridian has evolved from a property transaction facilitator to a comprehensive wealth management partner for Chinese families. Their services now include:

Family office establishment for ultra-high-net-worth Chinese clients
Next-generation education planning combining property investment with international schooling strategies
Sustainable investment programs focusing on ESG-compliant properties
Cross-border tax ooptimisationhelping clients navigate complex regulatory environments

The Numbers

Assets under management: S$3.2 billion (exceeding pre-crisis levels)
Geographic allocation: 35% China, 45% Singapore, 20% other Asian markets
Client base: 280 families (down from 400+ at peak, but with higher average investment per family)
Employee count: 68 (lean but highly skilled)
Annual revenue: S$89 million (compared to S$127 million at 2021 peak, but with higher profit margins)

Chapter 7: Lessons from the Phoenix (2026)

As Sarah Lim reflected on Meridian’s journey from near-collapse to renewed success, she identified several key lessons that would shape the firm’s future strategy:

1. Crisis Creates Opportunity, But Only for the Prepared “We didn’t just survive because we were lucky,” Sarah noted in her annual letter to investors. “We survived because we were willing to fundamentally rethink our business model when the world changed around us.”

2. Relationships Trump Transactions The shift from transaction-focused services to relationship-based advisory created more sustainable revenue streams and deeper client loyalty. Chinese clients who had been burned by property market volatility valued trust and expertise over promises of quick returns.

3. Quality Always Wins.. Their focus on trophy assets in prime locations, despite higher acquisition costs, proved prescient when the market began to recover. Generic properties remained challenged, but truly exceptional assets commanded premium prices from returning buyers.

4. Geographic Diversification Requires Cultural Intelligence. Success in cross-border property investment demands a deep understanding of both markets, regulatory environments, and cultural nuances. Meridian’s survival depended on its ability to navigate Chinese capital controls while optimizing Singapore’s foreign investment policies.

5. The Future is Institutional. Individual Chinese property investors were being replaced by family offices, sovereign wealth funds, and institutional players seeking diversified, professionally managed exposure to regional property markets.

Epilogue: The Next Chapter (2026)

As 2026 began, Sarah Lim stood once again in her Marina Bay office, but the view had changed. Where once she had seen only storm clouds over the Chinese property market, she now saw a more mature, stable, and sustainable investment landscape.

Meridian Capital was launching its next phase of growth: a S$500 million Asia-Pacific Property Innovation Fund focused on sustainable development, innovative technologies, and demographic transition opportunities across the region.

“The crisis taught us that resilience matters more than growth,” Sarah reflected. “We’re building a firm that can thrive in any market cycle, not just the good times.”

The Chinese property market crisis had been brutal, claiming hundreds of developers and billions in investor capital. However, for firms like Meridian, which were willing to adapt, learn, and invest through the darkness, it also created opportunities that would define the next decade of Asian property investment.

Chinese wealth was returning to international markets, but it was more sophisticated, more cautious, and more demanding. Singapore’s position as a stable, well-regulated financial centre made it ideally positioned to capture this next wave of cross-border capita, —and firms like Meridian, which had survived the storm, were best equipped to guide it.

The phoenix had risen from the ashes, transformed but stronger than before.

This fictional account is based on real market dynamics and represents the type of strategic adaptation that successful property firms have employed during China’s transition in the property market. While Meridian Capital is fictional, the challenges and opportunities described reflect actual market conditions and successful business strategies observed during this period.

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China Property Market Recovery