Reporter | Zhang Ziyi
It's The Middle Sea again.
On October 13, the central enterprise China Overseas Development (00688. HK) (hereinafter referred to as China Overseas Real Estate) won the second parcel of land in the second batch of centralized land supply in Beijing.
By the end of the second round of centralized land supply in Beijing, China Overseas Real Estate had independently harvested two parcels of land. The company bid for a plot of land in Northwest Wang Town, Haidian District, Beijing for a total price of 4.5 billion yuan, with a saleable residential floor price of about 53,700 yuan / square meter, a premium rate of 5.63%,63%, and won the plot of Shougang Park in Jingshan District for 1.16 billion yuan.
In the case of the second batch of soil auctions in various cities, the premium rate has dropped sharply, and the flow rate has gone high, China Overseas Real Estate has become a big winner in the soil auction market.
According to the data listed by the local public resource trading center and CITIC Construction Investment, the amount of land obtained by China Overseas Real Estate reached 33.72 billion yuan, becoming the enterprise that spent the most on the amount of land for the second round of centralized land supply, with a total of 13 cases of land, and ranked first in the number of land acquisitions of the TOP50 housing enterprises with China Railway Construction.
Among the first-tier cities, China Overseas Real Estate has gained in Beijing, Shenzhen and Guangzhou. In Shenzhen, China Overseas Real Estate bid for four land parcels, becoming the enterprise with the largest total number of land acquisitions in the second round of centralized land in Shenzhen, with a total land acquisition amount of 12.715 billion yuan; in Guangzhou, China Overseas Real Estate is also the enterprise with the largest total number of land acquisitions, with a total of 3 land parcels, with a total land acquisition amount of about 9.9 billion yuan.
According to incomplete statistics, in September, China Overseas Real Estate (including China Overseas Hongyang) has accumulated 24 cases of public land acquisition in Tianjin, Suzhou, Shenyang, Chongqing, Guangzhou, Nanjing, Shenzhen and other cities, with a new construction area of more than 2.89 million square meters and a total transaction price of nearly 50.8 billion yuan, equivalent to 65% of the total land acquisition in the first half of the year.
In terms of land investment, the strategy of China Overseas Real Estate in the second half of the year is in stark contrast.
China Overseas Real Estate was more conservative in the first half of the year, and after the implementation of the "two concentrations" policy, it added a piece of land in Beijing, Tianjin, Guangzhou and other cities. According to data from the China Finger Institute, the amount of land acquired by China Overseas Real Estate in the first half of this year was 43.5 billion yuan, ranking tenth among housing enterprises.
China Overseas Real Estate explained the company's investment philosophy at the 2021 interim report performance meeting. Yan Jianguo, chairman of the company, said: "The first batch of centralized land supply market is very hot, the competition is fierce, and the return is relatively low. We stick to the investment scale and demand reasonable returns. We don't buy land for the sake of buying land, and we don't buy land that doesn't make money. ”
At that time, he predicted that the land side would be more rational in the second half of the year, and enterprises such as Zhonghai would have more opportunities.
Yihan think tank statistics found that in September, the land transaction premium rate of all energy-level cities fell year-on-year; the land transaction floor price increased year-on-year, down 36% from ordinary second-tier cities. Among the first-tier cities, the premium rate of the second batch of centralized land supply in Guangzhou and Shenzhen has declined significantly, which is 11 percentage points and 19 percentage points lower than that of the first batch, respectively. The premium rate of land transactions in core second-tier cities was 2.9%, down 78% and 45% year-on-year, respectively. The heat of the soil beat has dropped significantly.
The investment target previously set by China Shipping is that the investment amount of new land rights and interests in 2021 will reach 165 billion yuan. Due to the small amount of land in the first half of the year, China Overseas Real Estate has an abundant amount of 110 billion yuan of land investment in the second half of the year, and the funds for land acquisition are very abundant.
For most housing enterprises, it is not easy to invest against the trend, which tests the financial strength and project turnover.
Yihan think tank analysis found that the second batch of centralized land supply and soil auction rules are more stringent, testing the operation and management capabilities of housing enterprises. In the second batch of centralized land supply, some plots in Tianjin and other cities have increased the requirements for construction or self-sustaining affordable rental housing and talent apartments, and Chengdu, Suzhou and other cities have increased quality-related requirements.
This requires that housing enterprises can not only bear the cost of allocation and self-sustainment, but also test their own ability to hold and operate, resulting in a decline in the willingness of housing enterprises to obtain land and a decline in the heat of the soil auction market. Moreover, the second batch of centralized land supply could not be opened within the year. The second batch of projects obtained by housing enterprises in the centralized supply of land will most likely not be able to open within the year, and will not contribute to the performance of housing enterprises in 2021, resulting in a decline in the willingness of housing enterprises to obtain land.
However, in addition to the strong financial strength of China Overseas Real Estate itself and the strength to obtain land, the expansion of soil reserves in the second half of the year is also a necessary requirement for it.
Under the idea that sales should maintain growth, although China Overseas Real Estate spends more than 100 billion yuan on supplementary projects every year, soil reserves still show a certain decline. In 2019, 2020 and 2021, the company's total soil reserves were 89.23 million square meters, 91.9 million square meters and 92.24 million square meters, respectively, of which the equity land reserves excluding the equity land reserve of China Overseas Hongyang were 53.67 million square meters, 52.36 million square meters and 49.85 million square meters, respectively.
It is worth noting that the scale of soil reserves in the first half of 2021 is the lowest level in the past four years.
After the spurt of land acquisition in the second half of the year, China Overseas Real Estate next considered digesting these lands and converting them into direct sales.
At this stage, the real estate sales market is very poor, and the sales scale of housing enterprises has declined as a whole. According to Kerry data, the overall transaction volume of the real estate market continued to decline in September 2021, and the overall transaction area of commercial housing in 28 key cities during the period fell by 7% month-on-month, and the year-on-year decline was further extended to 25%, down 17% from the same period in 2019.
On October 7, China Overseas Real Estate announced that in the first nine months of this year, the cumulative sales amount of contracted properties of China Overseas series companies was about 275.301 billion yuan, an increase of 7% year-on-year; however, the sales amount of contracted properties in September fell by 41.6% year-on-year to 20.373 billion yuan.
This is also the third monthly sales decline for China Overseas Real Estate in 2021, with the company falling by 10%, 5.6%, 13.1% and 41.6% year-on-year respectively in the past four months. This sales trend is also in line with the sales situation and market conditions of other large housing companies: since June this year, the market has gradually cooled.
The cold sales market is not a problem of China Overseas Real Estate, but a challenge that the entire industry is encountering. For China Overseas Real Estate, after the second round of centralized land supply harvest, how to achieve rapid sales de-industrialization will become a new problem.