The data I released here is a table of operating cash flow in the real estate industry since 2000, and the data source is the National Bureau of Statistics. In order for you to better understand this table, the screen will stay on this table, waiting for you to see it clearly, we will continue to analyze.
The second line is the estimated tax payment at the overall tax burden rate of 15%. This percentage may be underestimated, not overestimated.
The third line is the actual amount of real estate developers' development investment. This amount is different from the amount of development investment classified as fixed asset investment, but refers to the operating expenses that are actually used in cash flow for land purchase, construction and management.
With these three sets of data, we can use the formula sales amount, taxes in place, and investment amount to calculate the real estate developer's operating net cash flow.
This is the fourth row of the table, which I painted yellow for emphasis. You can see that the real estate developer's operating net cash flow has always been positive
The fifth line is under construction, which is an asset in the hands of real estate developers that can be realized in the future and can also be used to pay off debts.
The sixth line is the completed area, the following content will not be detailed, you can pause and take a closer look.
Next, I'll elaborate on the tabular data. First, the operation of real estate developers has always been copying, and it is a great copy. This can only say one thing, since the official launch of residential commercialization in 2000, real estate developers as a whole have never transferred profits. Real estate developers put all their profits into expanding production, and this is not enough, they continue to borrow and increase investment, so the negative net cash flow gradually amplifies.
The cumulative net cash flow of real estate developers since 2000 is 65.82 trillion yuan. Due to negative cash flow, real estate developers must make up for it by borrowing. Therefore, the scale of more than 60 trillion yuan of debt is comparable to the current total debt of local governments. This figure is an interesting coincidence, because real estate developers, like local governments across the country, are as good at indebted.
In 2021, the annual capital investment of real estate developers reached 20.11 trillion yuan, which is the peak of the real estate industry. However, in 2022, the real estate market collapsed rapidly, causing home buyers to stop buying homes, and the cash flow of real estate developers deteriorated sharply. More than 40 of the top 100 housing companies defaulted on their debts. As a result, the annual capital investment of real estate developers in 2022 fell sharply to 14.9 trillion yuan, a decrease of 25.9%. It should be noted that the capital investment of real estate developers is hard investment, although it can be taken less, but the project investment cannot be reduced. In the past, real estate developers had to pay the land price in installments, and now they must also pay on schedules. Such a huge decline in capital investment will inevitably be reflected in the completed area.
As a result, the area completed in 2022 decreased by 15.0% compared to 2021.
In the first quarter, real estate developers' capital investment was 3.47 trillion yuan, which continued to decline by 9.2% from 3.82 trillion yuan in the same period in 2022, indicating that real estate developers are still forcibly cutting spending. Finally, the total debt scale of real estate developers is 65.82 trillion yuan, and the corresponding scale of projects under construction is 7.646 billion square meters, and these projects under construction are also the assets of real estate developers.
We will now calculate in detail whether the income generated by the sale of these projects in progress will be enough to repay the 65.82 trillion liabilities of the real estate developer. These works in progress need to be completed before they can be sold. I assume that the average construction progress of these projects in progress is 50%, which is realistic. And I am optimistic that the real estate developer will pay according to the progress of the project along the way, and there is no arrears in the project payment. The cost of unilateral construction will not be a problem if I estimate it at 3,000 yuan per square meter. In this way, the construction project under construction needs to invest at least 11.47 trillion yuan in construction costs.
These assets I am optimistic that according to the average sales price of commercial housing in the first quarter of this year of 10,200 yuan per square meter, the future market can maintain stability, not a penny of price reduction. In this way, the income obtained after the sale of all assets is 10,200 yuan, and each square meter multiplied by 7.646 billion square meters equals 77.99 trillion yuan. The tax expense from sales is 77.99 trillion multiplied by 15%, which equals eleven .70 trillion. In total, all the assets in the hands of real estate developers can be exchanged for up to 77.99 trillion yuan in income, after deducting 11.47 trillion yuan of engineering fees and 1.170 billion yuan in taxes and fees, only 54.82 trillion yuan remains, which is simply not enough to repay the 65.82 trillion liabilities on real estate developers.
The only way to close the gap is to completely exempt real estate developers from paying about 12 trillion yuan in taxes. I don't think it's possible.
This is roughly the case, there are already some real estate projects under construction that have been pre-sold, and these real estate projects cannot be sold again. However, real estate developers also have other holdings outside of construction in their hands, and if we weigh them, there should not be much difference in value. The key problem is that if house prices continue to fall and the assets in the hands of real estate developers depreciate, it will be more difficult for them to service their debts. To put it bluntly, China's real estate developers are generally insolvent, that is, bankrupt, and now they are barely delaying the outbreak of the bankruptcy wave. Everyone, this is the source of the Chinese-style debt storm, which is fundamentally unsolvable. If you want to resolve it, unless house prices soar by 20% again, but now that everything is depressed, can ordinary people still afford it? This is impossible, so everyone should be prepared for the debt storm.