New policies have been introduced in many places! There are new ways to play real estate

"House moves, Lamborghini". The old reform is regarded as a once-in-a-lifetime "rich" action, and it is not uncommon to get rich because of demolition, and there are not a few real estate companies that have developed and grown by virtue of the old reform business.

Today, that phenomenon is gone.

After Circular No. 63 in 2021, the era of "large-scale demolition and reform" came to an end, and it was replaced by the rise of the "renewal" model.

Urban renewal is not limited to demolition and reconstruction, but also includes partial repairs. What's more worth mentioning is that the demolition and construction at this stage is also very different from the traditional demolition. At a time when urban renewal continues to increase, the renewal mode of old residential areas is undergoing a new change.

A large number of dwellings tend to age

There is a long way to go in the renovation of the old work

China's real estate has entered the era of stock, not only because the housing market is becoming saturated, but also because a large number of housing is aging.

This determines that the renewal and transformation of housing stock will be the highlight of the real estate market in the future.

According to data from Qipu, as of the end of 2020, the per capita housing floor area of mainland households was 41.76 square meters, reaching the level of developed countries.

At the same time, due to the concentration of construction time, a large number of houses are also collectively "aging".

According to statistics, by the end of 2022, about 20% of existing houses in cities and towns have been built for more than 30 years, and by 2040, this figure is expected to reach 80%.

Some of the communities built in the early days of the founding of the People's Republic of China have been reduced to dilapidated houses, and the living experience is almost the same, and it may even threaten personal safety.

According to the statistics of the Housing and Urban-Rural Development Bureau, there are more than 30 billion square meters of housing stock in cities and towns, and a total of about 220,000 old residential areas need to be renovated and renewed.

The demolition and reconstruction in the past few years has led to a large number of housing renewals and also boosted the renewal of the region.

However, this large-scale renovation model has encountered serious bottlenecks in recent years. Click here to learn more about the project management platform

On the one hand, after years of transformation, most of what remains now is hard to bite. The huge stock of old communities has also put pressure on local finances.

On the other hand, the reshuffle in recent years has made many real estate companies take care of themselves, and the old reform of such projects with a long cycle and strong uncertainty, not to mention private enterprises, even state-owned enterprises are very cautious.

The traditional model is unsustainable, and the renewal mode such as micro-renewal and in-situ demolition and construction has quietly stepped onto the stage of history.

Partial modernization

It has become the mainstream model of old reform

Since 2020, the central government has been increasing capital investment in old renovation, especially for the renovation of old residential areas.

Different from the large-scale demolition and construction in the past, this round of renovation of old residential areas emphasizes more on making up for the shortcomings of the city, focusing on improving functions and enhancing the vitality of the city.

Last year, 36,000 elevators were installed, 850,000 parking spaces were added, 21,000 community service facilities for the elderly and childcare were built, about 100,000 kilometers of gas and other pipelines were renovated, more than 4,100 pocket parks were built, and more than 5,300 kilometers of greenways were built.

Local renovation and complementary functions are the mainstream mode of renovation of old residential areas.

In the past three years, a total of 39,000, 53,000, 51,000 and 53,000 old residential areas have been renovated across the country.

According to the national plan, by the end of 2025, the task of renovating old urban communities that need to be renovated will be basically completed by the end of 2000. This year's goal is to complete the renovation of 50,000 old residential buildings.

The old communities included in the renovation category are usually structurally safe, but the design is poor, the functions are incomplete, or some functions are in disrepair, and the living experience can be significantly improved by adjusting the layout, improving the facilities, adding equipment, and improving the function of the housing.

Taking Shanghai as an example, the "Administrative Measures for the Implementation of Complete Sets of Renovation, Demolition and Reconstruction of Old Housing in Shanghai (Trial)", which was officially implemented in Shanghai last year, clearly stated that "old houses with poor building structure, incomplete functions, and real need to be retained, through in-situ reconstruction, etc., so that they can be used as complete sets alone." ”

Due to historical reasons, many old houses in Shanghai do not have independent kitchens and bathrooms. The complete set of renovation is to add a separate bathroom/kitchen to these old houses through expansion to improve the living experience and convenience.

In addition, the renovation of the old community also includes:

Infrastructure maintenance and transformation, such as water, electricity, gas, heating, communication and other pipeline line renewal and maintenance, as well as roads, parking lots and other public facilities improvement.

The renovation of the building itself, such as external wall insulation, waterproofing, door and window replacement, installation of elevators, etc., as well as the maintenance of corridors, balconies, roofs and other parts.

Renovation or addition of service facilities, such as the addition of fitness equipment, children's amusement facilities, elderly care service facilities, barrier-free property rooms, express lockers, charging piles, etc.

However, not all old neighborhoods can be renovated for the purpose of renewal. This type of house needs to be renewed in another way.

Shanghai, for example, has made it clear that old houses with poor structure, disrepair, incomplete functions, potential safety hazards and no repair value can be demolished and rebuilt.

For the demolition and reconstruction of old communities, new ways to play are also being explored.

The old reform has entered a new stage

Pilot the original demolition and original construction model in many places

Up to now, five cities, including Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou, have introduced relevant support policies and taken the lead in exploring new models of old reform.

A model of renovation of old residential areas, which is different from traditional demolition and local transformation, has entered the path-finding stage.

The traditional demolition method, the demolition and reconstruction of the community, the floor area ratio will increase significantly. For example, in Shenzhen, a number of new residential areas have been renovated from the old, and the plot ratio is as high as more than 5. After the completion of the project, in addition to a part of the relocation housing, the remaining houses will be sold by the developer to recover the cost of the premise investment and obtain the corresponding profit.

At present, the old renovation model that is being explored in many places is also to demolish and rebuild the original building, but the floor area ratio will not change much, and the residents are also residents of the original community, and the living function and comfort of the reconstructed community will be greatly improved.

At the end of last year, the news that the residents of Zhegong New Village in Hangzhou raised 470 million yuan to rebuild the community attracted widespread attention.

There are 13 buildings in the complex, the oldest of which was built in 1983.

According to reports, some buildings in the community have long been identified as C-level dilapidated houses (dilapidated houses are classified into ABCD level 4, and D-level is the most dangerous), although they have been reinforced, but the effect is not obvious.

According to local policies, the old reform method may be further strengthened.

Residents are reluctant to extend the life of their homes with reinforcement mode. As a result, the residents of the community applied independently and entrusted the government to provide demolition and construction services.

In the end, the housing and urban-rural development department took the lead, with the participation of planning, garden, transportation, land and other departments, to implement the overall demolition of the community and re-plan the construction.

After the original 13 houses are demolished, 7 small elevator buildings with 11 floors will be built. In addition, more than 2,000 square meters of supporting facilities such as "one old and one small" activity center will be built, 450 underground parking spaces will be added, and the greening rate will also be increased to more than 25%.

The local government has provided policy support for the reconstruction of the community. These include the issuance of temporary rental subsidies for residents, the provision of special funds to support the renovation of residential areas, the installation of elevators, and the transformation of future communities.

Soon after, Zhejiang issued the "Guiding Opinions on Steadily Promoting the Pilot Work of Independent Renewal of Old Urban Communities (Trial)", and Zhegong New Village was promoted as a demonstration case.

The reconstruction mode of Zhegong New Village is very different from the traditional old reform:

❶ Diversification of funding sources, the government is no longer the only contributor, but is jointly borne by residents and social capital, and the government gives appropriate incentives;

❷ Residents do not need to move and resettle, the project demolishes the old building on the original site and builds a new building, and the residents are still aborigines, which not only retains the nostalgia, but also better retains the urban style.

This model is called "original demolition and original construction".

In fact, Zhegong New Village is not alone. Previously, Shenzhen, Beijing, Chengdu and other places also had successful cases.

The earliest original demolition and construction project in Shenzhen can be traced back to 2006. Under the leadership of the joint-stock company, Tianbei Village raised its own funds and demolished its own construction, demolished 80 old buildings, and built 5 32-story residential buildings.

In addition, Beijing's Jinsong North Community, Shanghai's Pengsanwu Community, and Chengdu's Central Garden Phase II are all successful practices of the original demolition and original construction model.

The most recent case is the residential building No. 2 Cluster Street, Fengsheng Community, Xinhua Street, Huadu, Guangzhou, which just started demolition and construction work last month. This is also the first dilapidated building project in Huadu District, Guangzhou, which is guided by government departments and self-financed by residents.

From the current point of view, the operation of this model is also different from place to place. Among them, there is nothing that has attracted the most attention than the source of funds.

Among the above-mentioned projects, Shanghai Pengsanwu Community is led by the government and financed by the government, Hangzhou Zhegong New Village is mainly self-raised by residents + social capital, and Guangzhou Huadu Project has a high proportion of government subsidies.

In contrast, the government's all-encompassing fiscal spending model is obviously not replicable on a large scale at present. The Hangzhou model and the Guangzhou model are more likely to be promoted in the future.

Marginal but sustainable

The old and the new are replaced by real estate enterprises to provide new opportunities

The traditional old reform is a typical asset-heavy model, with a large amount of capital, a long cycle, and high complexity, which is daunting to many real estate companies. In this round of industry downturn, old reform projects have become a drag on many real estate companies, and a large number of old reform projects have also been shelved due to financial pressure.

In this context, the original demolition and original construction mode of the old community is more operable for real estate enterprises.

Real estate enterprises invest a certain amount of money to participate in the renovation of the community, in exchange for a certain number of years of the right to operate the public space and facilities of the community, so as to obtain the corresponding return on investment.

Taking the reconstruction of Beijing Jinsong North Community as an example, the private enterprise Vision Group is responsible for the renovation of the community. The company invested 30 million yuan in the early stage to participate in the transformation of the first and second communities of Jinsong North Community.

In return, the street where the neighborhood is located signed a 20-year renovation and operation agreement with the company. After the renovation of the project is completed, the company will receive a return on investment through property operations and services, including property management fees, parking management fees, and rental income from spaces such as shops, restaurants, and community service centers.

The company estimates that the project will take about 10 years to recover the upfront investment costs, and the next 10 years will enter a profitable period.

For real estate companies, the initial financial pressure is not as great as the traditional old reform, and the later income is not as fast as the traditional old reform, which is a "trickle of water" way to make money.

This is also consistent with the current trend of "making slow money" in the industry. It requires real estate companies not only to have development capabilities, but also to have operational capabilities. For the real estate enterprises in transformation, this is not a small test, but also a new opportunity.