Property Morning Participation | Next year's real estate work will be clear, and after the new policy in Beijing and Shanghai, the transaction volume will increase significantly

Every reporter: Chen Ronghao Every editor: Wei Wenyi

| Tuesday, December 19, 2023 |

NO.1 The Central Finance Office has clarified the three major priorities of real estate work in 2024

On December 18, according to the Chinese government website, the relevant person in charge of the Central Finance Office responded to the current real estate situation and the focus of next year's real estate policy in an interview with the main central media. The relevant person in charge of the Central Finance Office said that to do a good job in real estate work next year and even in the future, we should focus on three aspects: first, actively and steadily resolve real estate risks; second, we should step up the construction of affordable housing, the construction of public infrastructure for both ordinary and emergency purposes, and the transformation of urban villages; and third, accelerate the construction of a new model of real estate development.

Comments: This reflects the importance and guidance of the Central Finance Office to the real estate industry, and shows the goals and measures of the policy to stabilize the real estate market, ensure people's livelihood and housing, and promote real estate transformation. Especially in the current situation where the real estate market encounters great difficulties and pressures, it is necessary to do a good job in ensuring the delivery of buildings, ensuring people's livelihood and ensuring stability, support the reasonable financing needs of the industry, promote mergers and acquisitions in the industry, and maintain the smooth operation and financial security of the real estate market.

NO.2 On the first weekend of the implementation of the Beijing-Shanghai New Deal, the number of real estate visits and transaction volume increased significantly

On the evening of December 14, Beijing and Shanghai simultaneously adjusted the new policies for the property market, which involved the optimization of the identification standards for ordinary residences, the reduction of the down payment ratio for house purchases, and the adjustment of the lower limit of mortgage interest rates. According to data from the Beijing Municipal Commission of Housing and Urban-Rural Development, 556 new commercial houses were sold in Beijing last Saturday (December 16), an increase of 131 units from the previous day and a month-on-month increase of 30.8%. Among them, Longfor Construction Engineering Jiuli Xichen has visited nearly 150 groups, an increase of more than 100% month-on-month. In the Shanghai real estate market, the number of inquiries and visits to many intermediary stores has increased, and the decision to sign contracts has accelerated. With the downward adjustment of the down payment policy, the sales office has also ushered in a wave of house visitors, such as a project in Jiading with nearly 60 groups of customers visiting in half a day, double the usual day. According to the data of the China Index Research Institute, on December 16 and 17, 977 new commercial residential buildings in Shanghai were signed online, with an area of 107,600 square meters, an increase of 126% and 128% respectively from the previous weekend (December 9-10).

Comments: This reflects the initial effect of the new property market policies in Beijing and Shanghai, showing the role of the policy in stimulating market demand and activating market transactions. The introduction of the new policy also reflects the government's attitude and determination to stabilize the real estate market, as well as the goal of supporting reasonable owner-occupancy demand and optimizing the housing structure.

NO.3 The sales area of new houses in Beijing in the first 11 months increased by 5.4% year-on-year to 9.462 million square meters

On December 18, the Beijing Municipal Bureau of Statistics released the operation of Beijing's real estate market from January to November 2023. From January to November, the new construction area of real estate development enterprises in the city was 11 million square meters, a year-on-year decrease of 19.5%. Among them, the area of new residential buildings was 6.325 million square meters, down by 15.5 percent, office buildings were 522,000 square meters, down by 14.4 percent, and commercial buildings were 537,000 square meters, down by 16.1 percent. In terms of sales, from January to November, the sales area of newly built commercial buildings in the city was 9.462 million square meters, a year-on-year increase of 5.4%. Among them, the sales area of residential buildings was 6.965 million square meters, up by 7 percent, office buildings were 592,000 square meters, down by 2.9 percent, and commercial buildings were 445,000 square meters, up by 0.5 percent.

Comments: This reflects the balance of supply and demand and the stable development of Beijing's real estate market. The year-on-year increase in the sales area of newly built commercial housing in Beijing indicates that the market demand is still strong, especially the growth of residential demand.

NO.4 In the first 11 months of Shanghai, real estate development investment increased by nearly two percent, and the area of residential sales fell by 1.2%

On December 18, the official website of the Shanghai Bureau of Statistics disclosed the basic situation of real estate development and operation from January to November. From January to November, Shanghai's real estate development investment increased by 19.7% over the same period last year. Among them, the construction area of commercial buildings was 165,020,800 square meters, an increase of 2.1%. Among them, the residential construction area was 77,649,600 square meters, an increase of 4.5%. The area of new construction of commercial housing was 20,966,400 square meters, down by 16.7%. Among them, the area of new residential construction was 11,908,900 square meters, a decrease of 12.2%. The completed area of commercial buildings was 16.442 million square meters, an increase of 39.9%. Among them, the completed area of residential buildings was 9,733,600 square meters, an increase of 50.1%.

Comments: This reflects the recovery of investment vitality and confidence in Shanghai's real estate market, especially the growth of investment in residential development. The year-on-year decline in the area of new construction of commercial housing indicates that the supply side of the market has contracted, which may be related to factors such as land supply, project approval, and capital cost.

NO.5 China South City: There are not enough financial resources to pay the November interest on or before December 20

On December 18, China South City (HK01668, stock price HK$0.305, market value HK$3.490 billion) announced that the group has been affected by the deterioration of the operating environment of China's real estate industry, and has encountered and is expected to continue to face major capital flow and cash flow constraints. In addition to other payment obligations under the November interest and notes, the Group has other significant payment obligations, including debt service obligations of approximately RMB500 million to a number of domestic financial institutions, which are due in December 2023. China South City said it did not have sufficient financial resources to pay the November interest on or before December 20, 2023. The Group has been actively seeking financing and strives to generate sufficient cash flow to meet its financial commitments.

Comments: It reflects the financial crisis of China South City, showing the company's capital chain rupture and the risk of debt default. The impact of this crisis may involve the company's shareholders, creditors, partners, employees, customers and other stakeholders, and may also cause certain shocks to the industry and the market.

NO.6 Zhongliang Holdings: The hearing of the restructuring plan will be held in the High Court of Hong Kong on January 9, 2024

On December 18, Zhongliang Holdings (HK02772, share price HK$0.275, market value HK$985 million) issued an announcement disclosing the overall solution, plan and restructuring support agreement with the creditor group. Zhongliang Holdings announced that the hearing on the scheme is scheduled to be held in the High Court of Hong Kong at 10 a.m. on 9 January 2024 and that an order of the High Court will be sought to convene a scheme meeting to allow scheme creditors to consider and approve the scheme as appropriate.

Comments: This reflects the progress of the restructuring of Zhongliang Holdings, and shows the company's willingness and efforts to reorganize. The key to this restructuring is the ability to obtain the support and approval of creditors, as well as the compliance with the requirements and procedures of the law.

NO.7 Chen Jian, former member of the Standing Committee of the Party Committee and deputy general manager of OCT Group, was examined and investigated

According to the Discipline Inspection and Supervision Group of the Central Commission for Discipline Inspection and the State Supervision Commission in the State-owned Assets Supervision and Administration Commission of the State Council and the Guangdong Provincial Commission for Discipline Inspection and Supervision: Chen Jian, former member of the Standing Committee of the Party Committee and deputy general manager of OCT Group, is suspected of serious violations of discipline and law, and is currently undergoing disciplinary review and supervision investigation by the Discipline Inspection and Supervision Group of the Central Commission for Discipline Inspection and the State Supervision Commission in the State-owned Assets Supervision and Administration Commission of the State Council and the Supervision Commission of Shenzhen City, Guangdong Province.

Comments: This shows the supervisory role of the Central Commission for Discipline Inspection, the State Supervision Commission and the local Commission for Discipline Inspection and Supervision, and the anti-corruption helps to ensure the safety and efficiency of state-owned assets and promote the reform and development of OCT Group.

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