China’s Real Estate Sector Faces Ongoing Challenges Amid 2026 Growth Outlook

China’s real estate sector is entering its fifth consecutive year of decline, according to the US-based Goldman Sachs. Data shows a drop in key property activity indicators, including new home construction, by 50–80% from the peak levels recorded in 2021, making real estate a major economic vulnerability.

Hui Shan, chief China economist at the bank, noted that with new housing projects continuing to decline, there is “no quick fix” to the property crisis, although its negative impact on GDP is expected to gradually ease at a rate of 0.5 percentage points per year in the coming years.

Optimistic 2026 Economic Forecast

Despite real estate challenges, Goldman Sachs projects China’s economy to grow in 2026, supported by rising exports and recovery from the real estate slump. The bank expects GDP growth of 4.8%, exceeding the consensus of most economists at 4.5%.

Future Trends: Smart and Sustainable Cities in 2026

Urban architecture in 2026 is expected to undergo significant transformations with a growing focus on smart and sustainable cities, as residential neighborhoods are being reimagined through urban regeneration and adaptive reuse of older buildings to enhance community life and reduce urban waste. Green and sustainable architecture is gaining prominence through the development of energy-efficient buildings and public green spaces that improve quality of life. At the same time, urban development is increasingly integrated with public transportation, combining residential and commercial units with transit hubs to facilitate mobility and promote sustainability. Innovation in design and technology is also driving the sector, with smart city models and data-driven architectural solutions enhancing efficiency and sustainability.

Despite ongoing challenges in the real estate market, 2026 presents an opportunity for architects and developers in China to reshape urban landscapes with a focus on sustainability, connectivity, and multi-functional urban spaces.

✦ ArchUp Editorial Insight

China’s real estate downturn, now entering its fifth consecutive year, underscores the fragility of Contemporary Urban Development in markets historically driven by speculative growth. While new construction has contracted sharply, the sector’s gradual adaptation highlights the potential of Functional Resilience through urban regeneration, adaptive reuse, and the integration of transit-oriented development. However, the scale and persistence of decline raise critical questions about Contextual Relevance, as urban renewal efforts must reconcile large-scale planning with local social needs and established community patterns. Yet, projections for 2026 suggest an opening for Architectural Ambition, with smart, sustainable, and mixed-use designs enabling architects and developers to transform neighborhoods into energy-efficient, connected, and multifunctional urban environments that balance innovation, livability, and long-term economic recovery.