10M17REI growth narrowed to 7.8% yoy with new starts declining in October    YTD REI for 10M17was up 7.8% yoy (vs. 8.1% in 9M17) and YTD residentialREI was up 9.9% yoy (vs. 10.4% in 9M17). We attribute this to: 1) land salesvalue growth slowing to 29.3% in Oct (vs. 46.3% in 9M17), despite volumegrowing at 18.3% yoy in Oct (vs. 12% in 9M17), and 2) a decline in new startsof -4.3% yoy in Oct (vs.6.8% in 9M17). As YTD land sales value remained high,inventory is still low, but with tighter credit in 4Q, we continue to expect 5%new starts and high single-digit REI growth for 2017.    Weaker sales growth due to high base; listed developer outperformed    Due to a relatively high base, property sales dropped in Oct, with volume down6.0% yoy (vs. -1.5% in Sep, YTD +8.2%) to 142mn sqm and value falling 1.7%yoy (vs. +1.6% in Sep, YTD +12.6%) to RMB1.1tn. However, if we compare theOct. sales with those of prior years, they are actually pretty strong(RMB804bn/721bn and 120k/115k sqm in 2015/2013). We expect overallproperty sales growth to remain weak for the rest of the year, but the sales oflisted developers will continue to outperform (our monitored 25listeddevelopers’ Oct sales were up 33% in aggregate and 53% in median). Webelieve those listed developers will continue to outperform and reach 40% yoysales growth for 2017F.    Strong land sales value YTD, but still under-supplied    Land area sold increased 18.3% yoy in Oct. (YTD of 12.9% vs. 12.2% in 9M17)and land value sold increased 29.3% yoy (YTD of 43.3% vs. 46.3% in 9M17).The 190mn sqm land sales YTD is stronger than the equivalent period in 2016,but still way below the historical peak of 337mn sqm in 10M11and 328mnsqm in 10M10. This, coupled with slower growth on new starts (+5.6% yoy in10M17), means we believe inventory is unlikely to pick up much in the shortterm (currently at 9.5/8/12months in T1/2/3cities based on our estimates).    Recommendations and risks    We expect sales volume to moderate further in 4Q17, due to strict policytightening and a high base. Unlike in 1H17, we expect more divergence indevelopers’ sales growth, due to different strategies and execution. Wesuggest investors accumulate developers with a strong execution record orabundant saleable resources, including Vanke, Country Garden, Longfor, KWG,Future Land and Aoyuan. We value stocks using NAV for existing projects. Keyrisks are further credit/policy tightening.

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