China's real estate market may have been twisted into an extremely twisted twist by the long-term struggle between "high housing prices" and "strict regulation".
Wen / Ba Jiu Ling
At the beginning of the article, let's do the question first.
How much profit can a local leading real estate enterprise in Hangzhou get from this project by taking a piece of land to build a house in Hangzhou?
Tips: In 2020, the Hangzhou Municipal Government's land sales income was 257.4 billion yuan (the second in the country), and in 2020, the cumulative increase in Hangzhou house prices reached 8.9% (the second in the country), and the growth of Hangzhou's permanent population in the past decade ranked first in the Yangtze River Delta.
What is the answer?
Recently, Qi Jinxing, chairman of Hangzhou's leading real estate enterprise Binjiang Group, gave the answer, he said in his interaction with investors, in this Hangzhou concentrated soil auction, Binjiang Group took a total of 5 pieces of land, under the lean and efficient management of the Binjiang team, the company's financing ability is strong, financing costs are low, brand influence is large, in such a situation, strive to achieve a net profit level of 1%-2%.
1%-2% net profit, this year's housing enterprises are so sad?
Let's look at Beijing.
In early May, Beijing listed 30 parcels of land, according to the report released by Chenxi Capital Research Institute, a subsidiary of Xuhui Group, of these 30 lands, loss and zero profit plots accounted for 39.13%, low-profit projects accounted for 52.17%, medium-profit projects accounted for only 8.70%, and medium-high profit and high-profit projects accounted for 0.
In the Beijing centralized soil auction in May, a real estate company took several pieces of land, but turned around and was rumored to withdraw land, and some analysts said that it was because of the large amount of land, low profits, and the accounting could not be calculated. Of course, this is a rumor, which the company has denied.
In Beijing, where housing prices are high, and Hangzhou, where a house is difficult to find, how can the developer's profit be so thin?
If you compare the real estate company to a bakery, and compare building a house to making bread, the low profit is nothing more than two reasons - flour is expensive, bread is sold cheaply.
For housing enterprises, the new house is limited in price, can not sell the real market price, which is why the new real estate in the big city was robbed as soon as it was opened, because there is a large difference between the new house and the surrounding second-hand house, and buying a new house is comparable to the "new" in the stock market that year.
Bread doesn't sell for a long price, but flour doesn't sell low. Ding Jiangang, president of the Zhejiang News Media Real Estate Research Institute, told Xiaoba that the main reason for the decline in the profits of housing enterprises is the fierce competition for land in hot cities and the high land price. And the price of new houses is limited by the ceiling, and the profits of housing companies are like sandwiches sandwiched in the middle, thinner and thinner.
Teacher Ding Jiangang said that in fact, some plots are explicit land prices are not too high, but the invisible land prices are very high. Taking Hangzhou as an example, the rules for land transfer are: first, to build 10% of the public rental housing on behalf of the company; second, when the premium rate reaches 30%, it is necessary to compete for self-sustainment, which means that housing enterprises begin to compete for which one has a higher proportion of self-support.
For example, 75% of the 57 land parcels in Hangzhou in May competed for self-sustainment, with the highest self-sustaining ratio reaching 40%.
The land is self-sustaining, cannot be sold, cannot be transferred, and can only be leased, which means that the developer cannot liquidate.
According to Ding Jiangang, on the one hand, competition and self-sustainment are helpless for housing enterprises, because the vast majority of housing enterprises have no operational experience in this area, and can only try various ways to use the model of renting instead of selling, and even many housing enterprises temporarily shelve this asset. The self-sustaining part becomes a hidden cost, and this part of the cost is spread to the sellable part, and the invisible land price is higher.
On the other hand, for the whole society, self-sustainment is a huge waste of resources. Hangzhou's self-sustaining area this time exceeds 662,000 square meters, if calculated at 100 square meters per set, it means that there are more than 6,600 units of land transferred this time, and no real commercial housing market supply has been formed.
Back to the original bakery, in addition to the high flour and low bread price, the bakery has another difficulty - financing difficulties.
Last year, housing enterprises ushered in the policy restrictions of "three red lines", specifically red line 1: the asset-liability ratio after excluding pre-collection is greater than 70%; red line 2: net debt ratio is greater than 100%; red line 3: cash short debt ratio is less than 1 times.
Some people have divided the major housing enterprises into various versions of the "red-orange-yellow-green" chart according to the provisions of the "three red lines".
Ding Jiangang teacher told the minibus that the "three red lines" can indeed reduce the financial risk of housing enterprises, although the regulatory level did not say this matter publicly, but everyone knows that the major housing enterprises are implementing, and strive to turn themselves into green codes, otherwise they will be in trouble when they settle accounts later.
Simply put, in order to meet the requirements of the "three red lines", housing enterprises must reduce leverage, reduce debt, tighten financing, and the cash flow at hand becomes tight.
"Silver root" and "ground root" are the two lifebloods of housing enterprises. Now, housing enterprises have been precisely regulated. Coupled with the price limit policy, from financing to land to selling houses, housing enterprises are restricted layer by layer, and profits naturally decline.
According to the CITIC Securities Research Report, the sample housing enterprises (12 listed real estate companies) surveyed by it have shown a downward trend in gross profit and net profit in the past three years.
The profits of housing enterprises are getting lower and lower, the land price is not cheap, and strangely, in many cities, developers are still rushing to get land.
At the end of February this year, the Ministry of Natural Resources determined that 22 key cities should implement the policy of "centralized land supply" for residential land, and the announcement of residential land in 2021 should not exceed 3 times. That is to say, the 22 cities in the pilot can only auction land three times a year.
Up to now, the first round of centralized land supply in more than ten cities such as Beijing, Tianjin, Shenyang, Changchun, Wuxi and Hangzhou has come to an end.
Judging from the data, there is a situation of uneven heat and cold. For example, only 6 of the 40 land parcels in Changchun were sold at a premium, 30 were sold at a reserve price, and 2 were auctioned. There are even 6 streaming auctions in Guangzhou.
But in hot cities, housing enterprises are very enthusiastic. For example, the main city of Chongqing launched 46 residential plots, without first-class auctions, and the average premium rate was as high as 42.99%. The 57 parcels launched in Hangzhou have an average premium rate of 26%.
Beijing and Shanghai seem to have long anticipated that housing enterprises will rush to get land, and specially set up a land premium rate, which must not exceed 10%.
Obviously there is no money to earn, but also rush to get land, what is the real estate enterprise?
Of course not.
Teacher Ding Jiangang said that it is not in the industry, it is difficult to understand the pain of housing enterprises. For most housing enterprises, compared with the profit and loss of a project, it is more important to maintain the brand in the market, to preserve the scale (for listed companies, there is also to preserve the stock price), to keep the team, to maintain the market share in a region, especially in a city like Hangzhou, which is regarded as the highland of China's real estate market, which also means that it is necessary to preserve the market highland.
Zhang Bo, president of the branch of the 58 Housing Research Institute, also agreed: taking land is the basis for the survival of housing enterprises, and housing enterprises themselves are through rolling development to achieve normal operation of enterprises. At the same time, due to the development of urban agglomerations and the trend changes in population flow, the tendency of housing enterprises to obtain land is also more clear.
Compared with those non-hot third- and fourth-tier cities with low land prices and even zero premium rates, the future development of strong second-tier cities such as Hangzhou has a strong certainty, including both the strength of economic development and the total amount of population flow, even if the current land price is high and the profit is low, but on the whole, the future profitability has stronger support.
The low profit of housing enterprises, after all, is the business of their housing enterprises, and what does it have to do with us buyers?
Careful analysis, the relationship is very large.
It is obvious that the low profits of housing enterprises are related to high costs, so they are more motivated than ever to reduce costs.
How can the cost be reduced? The first choice is to reduce the quality.
Therefore, the day of handing over the house is the beginning of the protection of rights.
In the past two years, the news of the rights protection of owners in major cities has emerged in an endless stream, such as greening and reduction, which was originally advertised as a five-fold garden, and there were only a few small shrubs after the house was handed over.
Fine decoration is not to mention, when buying a house, the owner paid a lot of decoration money, and the fine decoration that arrived after delivery is difficult to say. For example, just after delivery, the ceiling began to leak, and after checking in, the bathroom began to grow mushrooms again.
Lu Jun, the founder of the "really called Lu Jun" public name, told the minibus that high land prices and price restrictions will indeed lead developers not to pursue good projects, and Hangzhou, which is known for its product strength, has actually experienced a very serious decline in quality in recent years. Because for developers, no matter what kind of quality house they build, they can sell it. At this time, the importance of buying a brand developer is highlighted, no matter what the market is, the bottom line is still relatively high, and there will be corporate responsibility to demand itself.
Some people describe China's real estate market as an extremely twisted twist by the long-term struggle between "high housing prices" and "strict regulation".
Indeed, in this distorted ecology, many strange things are happening: the regulation and control are increasing layer by layer, and house prices are still rising; developers have no profits and still want to grab land; buyers grab houses on the front foot, and defend their rights on the back foot...
This is certainly a difficult problem to solve, but there must be some solution ideas. Teacher Ding Jiangang put forward a solution to the problem, he believes that the current abnormal state, distorted state, need to reflect.
In the end, it is necessary to return to the original face of the market. The market belongs to the market, and the guarantee belongs to the guarantee. Regulation is not that it cannot be regulated, nor that it should not be regulated. But regulation, more should be carried out by legal and economic means.
The administrative means are usually blocking, but the end result is bound to form a dangerous dammed lake.
There are many more methods available for economic means. First of all, in terms of financial policy, in addition to reducing the leverage of personal mortgage loans, it is also necessary to plug loopholes such as operating loans.
Second, a cascade deed tax, a special consumption tax (you can also set up a special stamp duty, or a resource occupancy tax).
For investors, the trading link is the bayonet. Assuming that a one-time levy of 20% or more in the transaction link, with the increase of the holding period gradually decreases, holding for more than 10 years, is regarded as self-occupied, can be exempted. Doing so will certainly intercept most investors.
At the end of the day, you still need to tie the bell.
Author | Li Mengqing | When the value is edited | Li Mengqing
Responsible Editor | He Mengfei | Editor-in-Chief | Zheng Yuanmei