The sales of thunderstorm real estate companies fell by 50%, and marketers sprinted to sell houses throughout the year, "the decisive battle at the beginning of the year"

Editor's note: Those who seek change are always new, those who innovate are always strong, and those who are optimistic are always advancing. In an era of great change, we need to grow with resilience and find a better way to stand in the world. It is the third article in the year-end planning series "Resilient Growth, Through the Cycle" for Tencent News' "Periscope" and "High Beam" columns.

Tencent News "Periscope" author Guo Yifei

At the end of each year, the developer's marketing line is extremely busy, and the sale of houses has entered the final sprint stage.

"This year's sales targets are under the most pressure, and this tension has continued since New Year's Day, from the group to the region, and has been putting downward pressure. As the person in charge of marketing for a project in Beijing, Lin Hai (pseudonym) admitted to Tencent News' "Periscope" that "the team basically couldn't catch their breath for a whole year."

Beijing's market, which has the strictest regulation, ushered in two rounds of relaxation this year: first, the "recognition of housing but not loans" released in September, and then a package of rescue policies such as reducing the down payment ratio and raising the non-general line in December.

In Lin Hai's impression, there were two waves of market this year, Xiaoyangchun in March and April and the bailout in September, which could sell more than 100 sets per month in these three months, while only more than 20 sets were traded in the worst month, and the annual sales volume fell by nearly half compared with last year. "Recently, the number of customers and transactions has not increased significantly, and if there is no policy, the flow rate may continue to decline. ”

"The quality of real estate sales data not only reflects the operating conditions of real estate companies, determines the income of real estate companies and the speed of cash flow, but also affects the confidence and financing behavior of real estate companies, and then affects land acquisition, construction and investment behavior. Ming Ming, chief economist of CITIC Securities, wrote in a recent research report.

The importance of sales is self-evident, but since July 2021, domestic commercial housing sales have been declining for two and a half years, setting a record for the longest adjustment period in history. According to the data of the National Bureau of Statistics, the sales of commercial housing in 2022 will still not stop the downward trend in 2023 after falling sharply from 18 trillion yuan in the previous year to 13 trillion yuan, with cumulative sales of 10.53 trillion yuan in the first 11 months, down 5.2% year-on-year.

Yihan Think Tank judged that the macro economy is still slowly repairing, the industry liquidity crisis has not been blocked, the industry has not yet reached the end, and the industry sales scale is not optimistic in 2024, and it is expected to continue to decline by 5%-10%.

The "fall limit order" is quietly withdrawing

The overall sales of the industry declined, and there were only a handful of real estate companies that grew against the trend.

Judging from the cumulative sales of the top 100 real estate companies in the first 11 months, 7 central state-owned enterprises such as China Shipping, China Resources, China Merchants, C&D, Poly, Yuexiu, and Huafa, as well as Binjiang Group, a private enterprise, can still maintain positive growth. Among them, only Poly (399.5 billion yuan) and Vanke (343 billion yuan) have crossed the 300 billion threshold. At the peak of the industry, Country Garden once reached a year-on-year scale of 700 billion yuan.

Industry fragmentation continues to intensify. According to the statistics of the China Index Research Institute, in the first 11 months, among the top 50 real estate enterprises, the sales of state-owned enterprises increased by 8.2% on average, mixed enterprises and stable private enterprises decreased by 15.3% and 6.8% respectively, and the insured private enterprises decreased by 48.0%. Among them, 9 insuring real estate companies, including Country Garden, Sunac, R&F and Jinke, all fell by more than 50% year-on-year.

In order to fight the year-end closing battle, marketers are trying their best to sell houses to catch up with performance.

Lin Hai said that in order to lock in the limited market customers, now pay a deposit of 100,000 yuan, you can give a one-month cycle, extend the online signing time, and promise to check out for no reason, the risk of this practice is that once the customer can not raise the down payment, next year will have to continue to fill the check-out pit.

"Now the overall discount can be given to 3-4 points, and special properties such as frontage and low floors can be directly given 7-8 points. A large-scale real estate company in Beijing, a project trader, told Tencent News "Periscope" that compared with the delivery of home improvement bags, parking spaces, storage rooms, these discounts, customers are more concerned about how much money can be saved, and the channel cost of intermediary distribution has also jumped from 1.5% at the beginning of the year to 3.5% today.

Compared with profits, since the beginning of this year, the above-mentioned traders have clearly felt that the group attaches great importance to the sales flow rate. He explained that in accordance with the requirements of the group's fast turnover, the original project was expected to be sold out at the beginning of the year, but now it is nearly a year late, and any discount at the beginning of the year is not approved.

At the same time as developers are reducing prices to save themselves, the "fall limit order" is quietly being relaxed, and the price reduction of new houses in Suzhou, Nanjing, Changshu, Huizhou and other places is no longer restricted. In December, Nantong, Jiangsu Province even issued a document saying that real estate companies are encouraged to take out some special listings to carry out preferential activities, and the number of listings should not exceed 5% of unsold listings in principle.

A Suzhou market source told Tencent News "Periscope" that the local area is now more concerned about the transaction volume, once the price limit is lifted, many high-land price projects can be allowed to be listed, even if the price of real estate falls a little, but the overall average price can still remain stable.

From volume PPT to volume construction

The unfavorable sales collection directly leads to the reduction of investment efforts by real estate companies, and they are more cautious in acquiring land, focusing only on key sectors in first- and second-tier core cities, so as to ensure sufficient profits. However, the convergence of investment strategies has also led to a continuous decline in the winning rate of local auctions, and it is not uncommon to use vests to participate in auctions.

Taking the Beijing market as an example, on October 19, Dongfang Yuhong, which specializes in waterproof coatings, finally won the Nanyuan plot in Fengtai District after repeatedly failing to win, with a total price of 4.014 billion yuan and a premium rate of 15%. The real estate price difference of 29,000 yuan per square meter has also attracted 7 real estate companies such as China Resources, Shoukai and China Overseas to participate in the lottery. A month later, Dongfang Yuhong transferred 95% of the equity of the project company to a subsidiary of the central enterprise China Overseas Real Estate at a low price of 470,000 yuan, indirectly confirming its "vest" identity.

Every time you apply to the group to participate in the auction of a piece of land, you need to do investment model calculations, and come up with hundreds of pages of PPT, including product design, project scheduling, marketing plans, customer analysis, etc., and even refine the color of the façade for several rounds, and almost go to the factory to select abrasives.

"In order to take the land, I patted my chest and promised various sales and profit targets, once I was lucky, this immediately became an assessment indicator, and now the market is down, and the indicator is basically difficult to complete. The above-mentioned investment and development people lamented that the winning rate is so low now, if it is delayed, not only will it pay a huge cost of silence, but also the problem of where the team will go.

According to the statistics of CRIC Real Estate Research, in the first 11 months, nearly half of the top 100 real estate companies did not acquire land, and among the top 100 real estate companies with a land acquisition amount of more than 10 billion yuan, only three private enterprises were private enterprises, and the rest were state-owned enterprises. Among them, the investment amount of China Shipping, Greentown and C&D increased by 25%, 17% and 36% respectively over the same period last year.

It is worth noting that according to the statistics of the China Index Research Institute, as of December 20, 18 of the 22 cities with centralized land supply have canceled the upper limit of land prices, and the bidding heat of high-quality land plots has risen, driving the overall transaction premium rate in November to increase to 7.2%, ending the downward trend for six consecutive months.

Under the rules of the game where the price is higher, it will undoubtedly further strengthen the pattern of state-owned enterprises as the absolute main force in land acquisition.

Joys and sorrows are not connected. If the company has no money to acquire land, it means that there is no place for the investment and extension line, and the latter is also the hardest hit area by layoffs. At present, more than 60 real estate companies such as Country Garden, CIFI and Shimao have entered the agency construction business.

A person in charge of the investment and development of real estate enterprises in Jiangsu and Zhejiang regions in debt restructuring told Tencent News "Periscope" that now the agent construction industry is becoming more and more volatile, and the local urban investment companies at the bottom have been bleak after a round of market education, and now they have begun to require the interests and risks of the agent construction party, and they must be invested in real money. "You can't sell the house, I won't give you a penny, and now the agent has no funds to play small stock trading. ”

The thunderstorm spread to state-owned enterprises

"Now that the thunderstorms are concentrated in private enterprises, are all our state-owned enterprises doing well? Although they do not have a debt crisis today, why don't people care about the quality of their assets and the level of operation?" Zhu Rongbin, former executive chairman and president of Yango City, publicly shouted in August last year.

After more than a year, the thunderstorm spread again, and Greenland and Sino-Ocean, which have state-owned backgrounds, were involved, and even Vanke, a "good student", suffered a double kill of debts and stocks, until the Shenzhen State-owned Assets Supervision and Administration Commission behind it came forward to support the situation and calm the situation.

In November, the state-owned enterprise Jinmao carried out internal organizational structure adjustments, and large-scale layoffs of city companies were carried out, and layoffs were inevitable. The outside world sighed, "The iron rice bowl of central enterprises is also unstable." ”

"At the beginning of the year, the group set a sales target of 50 billion yuan, and now it has completed less than 30 billion. A regional executive of a large-scale real estate company told Tencent News "Periscope" that last year's income was 9% off, and this year's performance is even worse, and it is estimated that it will be 78% off.

The person in charge of the above-mentioned Jiangsu and Zhejiang investment and development said that the original team had 8 people, and now they are left with their own cuts, and last year's year-end bonus was also issued for two months, and this year's company's funds are so tight, and the year-end bonus must be out of play.

With unfavorable sales and poor financing, developers can only turn inward, save expenses, and use precious cash flow to complete the hard task of ensuring delivery.

On December 12, Country Garden announced that the annual salaries of four directors, including Yang Huiyan and Yang Ziying, and President Mo Bin, were reduced to 120,000 yuan. In 2021, Mo Bin's annual salary was once as high as 191.6 million yuan. In addition, the annual salary of the company's executives this year has decreased by 86% compared to 2021, and all executive car allocations have been cancelled.

According to statistics from Leju Finance and Economics, in 2022, the total remuneration of 87 CEOs of listed real estate companies will reach 368 million yuan, a significant decrease of nearly half from 688 million yuan in 2021. Among them, 57 CEOs of real estate companies have seen their salaries drop, and most of them have seen their salaries fall by more than 20%.