Supply-side risks in localized housing markets: Evidence from apartment development in China’s third-tier cities

Abstract As China’s urbanization enters a more localized and intensive phase, the real estate sector is increasingly facing unique structural challenges in lower-tier markets, where capacity is limited, and sales pressure is high. This research investigates the risk landscape of market competition, marketing, and sales in apartment development projects within China’s third-tier cities to support strategic decision-making and project optimization. The study employs the Analytic Hierarchy Process (AHP) to analyze survey data from a panel of real estate experts, focusing on identifying critical risk factors across various development stages. The results show that the planning and sales stages receive relatively higher risk weights, indicating that early-stage market identification and subsequent sales performance are important components of the overall risk structure. Specifically, competition and market analysis and marketing appropriateness receive the highest composite weights, whereas broader macroeconomic factors do not dominate the overall risk structure. The findings suggest that accurate market positioning and effective marketing practices represent important risk-management priorities for apartment development projects in third-tier cities. These findings provide developers with an empirical basis for optimizing project positioning and sales strategies amid intense competition and limited market absorption.