Blue-chip real estate looks at the city | shell Li Wenjie: Digital upgrading has become a new driving force in the market

On April 29, 2020, Li Wenjie, senior vice president of Shell Housing, delivered a keynote speech at the 17th (2020) Blue Chip Annual Conference hosted by the Economic Observer Newspaper, mainly analyzing the post-epidemic market.

The impact of the COVID-19 pandemic on the real estate industry is already in a recovery period, and the property market has ushered in a market recovery in March after experiencing a February market with almost zero transaction volume.

Shell data shows that after the epidemic, the country issued 307 real estate-related policies in the first quarter, of which 6 policies were "one-day trip" policies that were withdrawn within one day after the introduction of policies to loosen the property market.

The complex domestic and foreign environment, policy factors and policy factors are facing the "incremental conversion" node of the real estate market, what challenges will the real estate market face? How should real estate companies respond?

The following is a partial transcript of the views:

Market risk

We believe that there are still some risks in the current property market, one is the increase in the operating pressure of enterprises, we can see that from 2018 to 2019, the debt issued by real estate companies in China and overseas has reached a new high, and by the 3rd and 4th quarters of this year, and even next year, the debt maturity of real estate is actually very large.

Today, the average household debt of Chinese residents is at a medium level in the world, in fact, there is a very large increase over previous years, from this point of view, the debt of residents is actually at a relatively high level.

Second, the entire rental market also has the risk of people's livelihood, because leasing is the entire economy has a relatively large impact, leasing includes the service industry, retail industry, but also some long-term rental apartments, etc., the impact of this market fluctuation on the service industry is very large, so from the perspective of the entire economic level, leasing has a risk of people's livelihood.

Third, there are actually certain policy constraints on housing consumption, China's real estate has experienced about 20 years of market development, in the property, community, decoration, and even some of the old residential areas of the renovation and expansion of the actual existence of a lot of policy bottlenecks, these bottlenecks if not broken, our future of the entire real estate market restrictions are also very large. It is estimated that these areas can produce about 10 trillion yuan of economic development scale, in fact, there is a very large increase in the entire field of housing consumption in the future.

For the entire real estate risk, we have three aspects of policy recommendations to protect people's livelihood.

First, the stabilization of the market can not be further leveraged, whether it is to develop the enterprise to issue bonds, or to the entire residential sector further borrowing, will increase the risk of the entire real estate; second, for the protection of low- and middle-income residents of the people's livelihood security, not only through the construction of new affordable housing, we believe that it is also necessary to protect the people's livelihood part of these rental markets through rental subsidies; third, to promote the consumption of real estate is not simply relying on government subsidies, but through the establishment of a long-term mechanism, Break some policy obstacles and bottlenecks in the past and stimulate the vitality of policies.

Digitalization and "New Infrastructure"

After the epidemic, we see that due to the impact of the epidemic, everyone is in home isolation, but housing consumption has not stopped, in February 2020, the shell platform to find a house and broker launched a total of 10.47 million VR belts, an increase of 34.6 times compared with January, this increase is very large, so you can see the popularity and application of digital technology, the speed of change in the field of residence has accelerated significantly.

You can see that in 2018, the central government put forward the concept of a new infrastructure, in 2019 the new infrastructure was written into the report of the National People's Congress, and recently, the Standing Committee of the State Council has a clear three definitions of new infrastructure.

New infrastructure is actually a very important outlet for the whole economy to be driven in the future, in the field of residence, new infrastructure is actually developing very fast, we believe that shell's new residential services are actually digital services, cooperation and mutual integration, which is actually consistent with the three areas of digital foundation, integrated development and technological innovation of new infrastructure.

A driving force of new residential services, mainly lies in the current excess of housing, structural imbalance in supply, demand for more pursuit of quality diversification these characteristics have been very obvious, in this context, we from the old concept of residence to the new concept of living transition, digital promotion of new residential services to residential consumption, new residential direction change.

Why do we think there is a lot of room for digitalization in the future of real estate?

The digitization of the real estate sector is actually much lower than that of other industries, such as finance, retail, chemicals, pharmaceuticals, and manufacturing. That is to say, the digitization of real estate has just begun to some extent, and there is a lot of room for improvement in the future, which is from the perspective of the supply side.

We see that the degree of digitalization on the supply side is actually much lower than that of other industries, but what do we see in the main part of the residential services value chain in China? At present, it is still concentrated on the construction link, that is to say, in the development and construction, the entire industry emphasizes construction, light operation and light service.

In China, the real estate industry still belongs to a construction industry, 86% of the industry value chain is concentrated in development and construction, not completely turned to services, in this case, we believe that the future will be transferred to the service side of residential properties and real estate brokers, from the supply side, the entire industry in the future actually has a significant and very large improvement.

From the perspective of digital infrastructure, why do we say it is called new infrastructure? The application of digital infrastructure in the real estate sector actually comes from the foundation of a new technology, and the ultimate goal is to improve the efficiency of the services we live in.

When it comes to the service efficiency of living, we all know that many of our consumers' pain points are in the field of residential consumption, such as the long cycle of house viewing, a lot of information opaque, and a series of problems such as running back and forth many times. In terms of housing, at present, we still have a lot of inefficiency problems, consumers feel that there are many very inconvenient places, in the future to improve service efficiency, reduce costs, improve decision-making and other aspects there is still a lot of room for improvement.

From the perspective of digital empowerment of service providers in the real estate industry, in fact, we also mentioned the further rise of the value of service providers, which is in the so-called future and rebirth of the real estate industry, we feel that the value of service providers will further rise. In the past, it was heavy construction, heavy capital, and heavy development, and the future was heavy operation, heavy service, and heavy service.

All in all, from the current impact of the entire epidemic on the entire real estate industry, combined with the previous few years, everyone said that the golden age of real estate has passed, and the future we usher in is a big turning point, including the long-term mechanism of real estate that we often mention, the epidemic has accelerated the turning point of the entire real estate market in the future, accelerating the entire real estate market to service, operation, and digitalization.

Combined with the digital foundation mentioned in the new infrastructure, the integration of real estate and digitalization, and the digitization of real estate innovation, I believe that real estate will remain an important locomotive to drive the economy in the future.