2021 Real Estate People | Industrial Park Development, Apartment Operators: Stop Loss in Time and Explore New Models

Wang Xiaohong (pseudonym) is the general manager of a development company in Guangzhou, which has had 5 projects of large and small scale, including apartments, creative parks and commercial streets. In the upcoming 2021, the real estate industry in Guangzhou and even the whole country has undergone major changes, and the company whose main business is industrial park development and long-term rental apartment operation is also facing unprecedented challenges, and Wang Xiaohong and her team are constantly making new explorations in the process of change.

In this year, Wang Xiaohong's industrial park development sector stopped losses in time, and its commercial projects and creative park projects sought to take over the market, which was not easy to spend a year; and the apartment project achieved full rent results after being handed over to a professional team for operation, but the profit was still unsatisfactory. Wang Xiaohong said that in the new year, she will look for other investment directions and look forward to starting again.

The following is Wang Xiaohong's self-statement:

Industrial Park Development:

The business was completely suspended and the project sought to be transferred

In 2021, my work is mainly responsible for the investment, development, construction and investment promotion of cultural industrial parks, as well as the operation of long-term rental apartments.

Resuming work after the Spring Festival in 2020, under the influence of the epidemic, I downgraded the company's ambition to become bigger and stronger to "live". For a whole year, mainly rushing in the project transformation project and investment promotion, by the end of 2020, seeing victory in sight, but due to the excessive expansion of other businesses of major shareholders, the industrial park development sector is about to be unable to last, and the funding gap of several projects is more than 10 million yuan. The shareholders tried their best to hold several closed-door meetings, and finally decided to suspend the industrial park plate business this year and stop the loss in time.

In February 2021, I resigned and resigned as the general manager of the company, but still hung the title of legal representative to assist in the finalization of the project, including finding a successor company for 1 commercial project and 2 creative park projects, needing to sort out all the data files of the project, taking customers to see the scene to answer questions, business negotiations, etc. In terms of apartment projects, I straightened out the cooperation with the outsourced investment operators to ensure a balance of payments, and originally wanted to lobby them to undertake the project as a whole, but in the end it did not work.

Until July, the transfer of the remaining 1 commercial project could not be negotiated and was handed over to the major shareholders to continue to follow up. I was busy for more than two years, and found that I gained a tired and painful experience, as well as financial losses, fortunately I quit decisively and stopped the loss in time, after all, "stay in the green mountains, not afraid of no firewood.".

Overall, the development and construction industry of industrial parks, in recent years in South China, vigorous and hot, has indeed had a "sunrise period" and a "dividend period", but with the changes in the general environment, especially the impact of the epidemic in the past two years, small and medium-sized enterprises have appeared "collapse tide", and the operation of industrial parks has become more difficult. According to data, in 2021, there are more than 12,000 enterprises in the country, the average life expectancy of small and medium-sized enterprises is 2.5 years, and most of the enterprises that have collapsed are new economy enterprises such as e-commerce enterprises, service enterprises, education and training enterprises.

Condominium Investment:

The pressure of competition is high, and the effectiveness of hiring a professional team is obvious

The stock of office buildings in the industrial park has long been surplus and is constantly adding vacancies, and the profit margin is low. And apartment investment has also become a "chicken rib". I was exposed to an apartment project with an investment of 8 million yuan, which made less than 5% of the profit per year, which was not enough to repay the interest on the bank loan. Therefore, heavy asset investment must be cautious. In the apartment business circle I know, many investors have outsourced the right to operate, pulled themselves out, to do what they are better at, or to turn to other outlet investments.

We must always believe in this saying, "Let the professional do the professional thing.". In the early stage of our company's apartment project, our own team through online and offline publicity, the use of human resources, and even the introduction of a 50% discount rent preferential policy, three or four months to complete the 30% occupancy rate. After a friend introduced a small professional apartment operation team to settle in, less than two months, it handed over the full rent answer sheet.

It is understood that after successfully investing in two apartment projects, this team quickly cultivated a capable investment operation team, created a set of marketing planning system, and in 2021 has successfully accepted a total of 5 apartment operation rights projects from other investors, each of which has completed the investment task in less than two months, and has been maintained at a rental rate of more than 95%, creating an "extraordinary" record in the industry.

This year, industrial park development, apartment investment, etc. have entered a more calm and rational stage. Image credit/IC photo

When it comes to the prudent investment of apartments, it is necessary to mention the project of guaranteeing housing and people's livelihood vigorously promoted by the local government in recent years. According to data, in a single old city in the center of Guangzhou, the number of affordable housing in public rental housing can reach 5,000 or 6,000 sets per year, and the winning rate is about 30%. Low-income families still have housing rental subsidies to receive before winning the lottery, and the family of three is about 1100 yuan per month. Coupled with the downturn in the real estate industry, some developers have converted the houses that are built but cannot be sold into guaranteed housing, which can not only revitalize resources but also win a good reputation, killing two birds with one stone. This invisibly divides the demand for commercial apartments by a large part, and squeezes out the rental income by a large part. Therefore, the professional team should be good at judging the merits of the project, whether it is the geographical location, decoration style or living atmosphere to meet the needs of young people, apartment investment has a certain feasibility.

Lessons learned:

Don't be too optimistic about borrowing money to start a business, and don't spread too much

In my opinion, whether it is the development of industrial parks, the creation of creative parks or apartment investment, I believe that the next development will enter a more calm and rational stage, investors will not blindly pay for their own money and operate, but also know how to cover their own money bags, unless they find a reliable and professional operation team to cooperate.

The entrepreneurial experience in recent years has taught me that we must not put eggs in the same basket, because the basket will be smashed when the eggs are broken; and do not be too optimistic to borrow money to start a business, whether it is personal debt or corporate debt, the entrepreneurial risk is too large, blind confidence and optimism, stemming from the lack of understanding of the market and the industry, not thorough enough. Some real estate bigwigs can't hold back, let alone our ordinary entrepreneurs!

"Ability can never match your ambition", the appetite should not be too big, whether it is the team or the entrepreneur himself, all aspects of resources are limited, cognition is also limited, once the stall is too large, as long as one of the links has a problem, it will move the whole body. You can look up at the stars, but you must be down-to-earth; you can have the world in mind, but you must also bear all the hardships derived from failure.

Although my first venture was not a success, I was not discouraged. During this period of rest, I thought more about the re-understanding and self-review of the industry, and looked for other investment directions, looking forward to starting again. I believe that as long as there is a dream in the heart, a light in the eyes, cherish the body, and love life, you can meet tomorrow's challenges healthily and strongly.

Beijing News Editor Yang Juanjuan Proofreader Liu Baoqing