Barclays Research said China's physical property market remained weak in 1Q as the data from the National Bureau of Statistics shows.
With the new starts hitting a five-year record low, the research house sees this as an indicator of developers' worsening sales prospects and deteriorating cash positions.
As such, Barclays believes that more developers will likely be forced to accelerate their sales programs even at the expense of some price discounts and that the sales performances among the developers will vary more significantly amid the de-stocking cycle.
It said the current valuations show that investors' expectations about the physical market are predominantly low and that some sales improvement, even at a moderate rate, would likely enough to move the needle. Barclays sees potential upside of 15-20% for Chinese property stocks.
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