Huang Xinwei: Don't think that the "suspension of approval of commercial offices" has nothing to do with housing

On January 19, 2024, it was rumored that Shanghai will suspend the approval of commercial projects from now on.

So far, there has been no response, but the "default effect" has largely been confirmed.

The statement about the suspension of approval of commercial projects in Shanghai has spread well, and after repairing the so-called original words of the rumors, the second half of the sentence is "asking for the focus of work to be shifted to urban renewal".

So, is this proposition category that seems to be "depreciating commercial real estate & praising urban renewal" related to residential?

The answer is yes.

First, the commercial office has reached the moment of "having to stop".

The practice of suspending the approval of commercial offices is absolutely necessary in terms of facts.

There are four words corresponding to the supply of commercial offices in Shanghai: building economy, it is under the "unified thinking" of various regions, that the planning is uncontrolled and detached from the industry, from the demand, and from the regional "physique".

At present, Shanghai has planned a total of 3 central business districts (traditional central CBD, Suhewan CBD, Longhua Bay CBD), 12 major areas (Dazhangjiang, Dahongqiao, Dacaohejing, Daxin Jiangwan, Dajinqiao, Daning, Dazhenru, Dasanlin, Dapujiang Town, Dahuajing), 5 new cities + 2 "mountains" (Jiading, Qingpu, Songjiang, Fengxian, Lingang, Baoshan, Jinshan), the supply of office products in the Shanghai Outer Ring Road and Hongqiao Business District will reach about 23.84 million square meters in the next five years, of which the new supply is expected to exceed 6 million square meters in 2024.

The heavenly supply did not wait for the inexhaustible receiver, and the legendary leader's speech spread with clear eyes, data and countermeasures: "For Hongkou Sichuan North Road, Pudong Lujiazui, Qiantan, Huamu, Songjiang G60 Corridor, Fengxian Meigu, Minhang Caohejing and other areas of the vacancy rate of more than 40%, it is necessary to come up with a practical plan, and we must ensure that the vacancy rate in the first half of the year is less than 20%."

The continued high supply has led not only to the vacancy rate, but also to the decline in the rental level and the vicious competition that has resulted in it.

On the one hand, Shanghai's population continues to decline – according to the latest data released by the Shanghai Municipal Bureau of Statistics, as of November 30, 2023, the number of permanent residents in Shanghai was 24.772 million, a decrease of 112,000 from the end of 2022. This is the fifth consecutive year that Shanghai's resident population has experienced negative growth.

On the one hand, there is the queue for the opening of commercial offices in Shanghai - although the approval of commercial offices has been suspended, the severity in front of them is that "74 shopping malls are already preparing to open in 2024", and the arrow has to be sent, and the result is also conceivable: even in the lively season when the countdown to the Spring Festival is less than half a month, the shopping malls in the top areas of Shanghai are still scarce, and a well-known host once sighed in the circle of friends: "Xintiandi on Friday night, the restaurant does not need to grab a seat in advance"?!

Second, without commercial planning, there will be no "bread will be" sales rhetoric

Space needs to be digested, used, and interpreted, whether it is commercial or office.

People (number) and space (area) are the numerator and denominator, the numerator is decreasing and the denominator is expanding endlessly, the downward trend of the value has been seen in words, and the brand is not unattached to the Shanghai market, but now it is indeed facing the helplessness of "the concubine can't do it": the brand also wants to expand & the company also wants to be bigger, but because of well-known reasons, it is indeed a bit of a sense of powerlessness to sail against the current.

Although the absolute value of population decline is not terrifying, the consumption downgrade that cannot be accurately counted by the numbers is what makes the phenomenon of commercial office control & brand closure more and more intense, so the suspension of commercial offices at least sees a little respite for the stock, especially those who have "seen the involution of their peers but have to open their own businesses".

Well, the suspension of the commercial office is the stock (commercial office) with both hands in favor, but is there also a side effect?

However, this policy has also caused the new housing market in Shanghai, which has the same high supply, to complain.

As we all know, the development of Shanghai's property market is accompanied by the outward expansion of Shanghai's city, especially those suburbs that were previously despised by the city center, and new home sales in the past 20 years in the face of sparse population, lack of supporting facilities, and barren industry, can be justified and tried and tested rhetoric is nothing more than two things: subway and planning!

The subway can justifiably alienate the distance into time distance, and combine it with the gradient of housing prices: "We are indeed 20 kilometers away from People's Square, but it is only 30 hours to drive by subway, but the housing price is one-third of People's Square, which do you think is cost-effective"?

Buyers who were shy in their pockets were instantly dismissed and embarrassed.

Planning, the best way to truly deal with buyers to express their dissatisfaction with the status quo in the sales office:

"There is no vegetable market, we have a large shopping center in our planning, plus a community commercial street";

"There is no school, we have a planned 9-year compulsory system in 5 minutes (by car)";

"There is no industry, this area is (planned) as a digital & artificial intelligence & blockchain industry cluster";

"There is no subway, it has been included in the next five-year plan, and the distance between the subway exits in the future is only a few meters."

All the "nos" can be justified because there is a plan.

Although the plan cannot be seen or touched, "the suspicious interests belong to the defendant" cannot accuse the sales of fooling.

In the final analysis, in the past 20 years when housing prices have risen unilaterally, "there will be bread, there will be milk, and everything will be there" is the invincible sales that fool home buyers, and it is also the sugar coating that buyers themselves choose to believe.

Therefore, under the suspension of the commercial office, the salesman's unashamed words may encounter repercussions, which is the lying gun of the property market.

Third, the favorable policies of each paragraph besiege the business loan, who wins and who loses?

2024 has just started, and the policy warmth of the property market is big or small, but they can't wait:

On January 13, Shanghai released the single purchase restrictions in Fengxian and Qingpu;

On January 17, [China Economic Times] wrote an article that the gradual relaxation of purchase restrictions in first-tier cities is the general trend;

On January 18, the China Index Research Institute predicted that the transformation of urban villages in megacities will drive 10 trillion yuan in the next five years;

On January 24, at the Shanghai CPPCC meeting, some members called for "further lowering the threshold for new Shanghainese to buy houses";

On January 24, the central bank announced that it would cut the deposit reserve ratio by 0.5 percentage points on February 5, releasing 1 trillion yuan;

On January 25, the State Administration of Financial Supervision called on financial institutions to vigorously support real estate;

On January 26, the Ministry of Housing and Urban-Rural Development requested that cities be given autonomy in real estate regulation;

On January 27, there was no restriction on the purchase of houses of more than 120 square meters in Guangzhou.

As a camp, the favorable policy is actually shouting to the buyers in the property market, whether the buyers are excited or not?

At least from the current point of view, the feedback from the market is not positive, of course, it may be related to the upcoming Spring Festival, which Chinese attach the most importance to, and buyers are a little "busy for the New Year", but perhaps there will be an invisible opponent at this node in 2024 - business loans.

The business loan is a loan issued by the bank to individual industrial and commercial households or small and micro enterprises and other business entities for business purposes, that is, a low-interest loan issued by the state to subsidize small and micro enterprises, which has nothing to do with real estate, and the policy has repeatedly emphasized that business loans should not flow into the property market.

However, because of the interest rate differential between business loans and housing loans, coinciding with the second half of 2020, the property market, especially the property market in the three major first-tier cities such as Beijing, Shanghai and Shenzhen, has soared.

The business loan is a three-year node, during which the buyer only repays the interest, and after three years, the principal is required to be paid off in full.

Although there is a risk of high leverage in this approach, it is still worth taking a risk in the continuous rise in housing prices, but in the past three years, including the property market in first-tier cities, prices have more or less declined, and now when it comes to the repayment node, those buyers who "fall below or even lose the down payment" may face a concentrated cut, which may further push up the supply of foreclosure houses, which is the gray rhinoceros that cannot be ignored in the first-tier property market in 2024.

Shanghai took the lead in suspending commercial offices, which must be a bone scraping and curing poison for Shanghai's overall economic recovery: the stock has won a precious respite, but the property market, especially suburban housing, is bound to become the price.

There is no doubt that the favorable trend of the property market policy in 2024 is undoubted, or as Zhou Libo said, "remove the door cover together", but as a game side of the market, to be precise, thousands of home buyers, there is no commercial office there is no supporting facilities, and there is no commercial office planning and no expectations, how is this good?!

Every day is history, and every day you live is witnessing history.