“The logic of the industry has changed”, how do the bosses of real estate companies view the 2023 property market

“The logic of the industry has changed”, how do the bosses of real estate companies view the 2023 property market

It’s annual report season again. After trekking through the frost and snow of the previous year, the helm of the real estate enterprise stood at the end of the severe winter and looked forward to the bright sun.

Vanke Yu Liang, who has a strong sense of urgency, fulfilled his promise to stabilize and recover profits, and began to make small money, long money, and hard money; Country Garden Yang Huiyan completed the handover of the scepter from her father in a complicated situation, positioning herself as a professional manager Facing the present; in the first quarter of this year, Poly Development, the only real estate company with sales exceeding 100 billion yuan, kept a low profile, and in the new year, it still requires itself to become bigger and stronger.

In the incomparable balance between cash flow and profit, they stabilized their position by sacrificing the latter; real estate enterprises have entered an accelerated period of debt transformation, and they strive to win the support of creditor groups in the long game. “The most difficult moment has passed” has become the industry consensus, but how to adapt to the new situation and achieve a new balance is still in suspense.

When “long-termism” is redefined, what is placed before these bigwigs is no longer just an introductory question of “building a house and making money”.

real estate listings.Photo by China News Agency reporter Zhang Bin

Industry logic changes

“Real estate is still a big and good industry.” China Overseas Real Estate, once known for its conservativeness and prudence, has become the most optimistic real estate company this year. Yan Jianguo, chairman of the board of directors of China Overseas Land & Investment, revealed at the performance meeting that he has set a sales growth target of 20% this year and is full of confidence in achieving this target.

In the first quarter of this year, China Shipping, which established “Haikou”, achieved a sales growth rate faster than that of the market. Zhong Hai, who has changed to a more aggressive style, realizes that the current real estate industry is in a turning point in the first and second half, and there is no time to wait to seize development opportunities.

Liu Ping, chairman of Poly Development, also regards 2022 as an extraordinary year, because the logic of industry development has undergone fundamental changes. He believes that the real estate industry is currently in a critical period from “scale expansion” to “high-quality development”, and will generally show new characteristics of “trend restoration, structural optimization, and kinetic energy conversion”.

“In the new industry cycle, we should actively grasp the structural opportunities brought about by new urbanization and the improvement of living quality.” Liu Ping said.

Although “the seriousness of the industry situation in 2022 far exceeds the expectations at the beginning of the year”, Yu Liang, chairman of Vanke’s board of directors, still believes that the demand for new houses in the future “has a ceiling and a bottom line”: on the one hand, the stock of commercial housing is already very large , the new housing market is unlikely to return to the historical peak in 2021; on the other hand, as long as there are no sudden changes in the external environment, the market can still maintain a demand of about 1.2 billion square meters for a period of time.

“Based on this judgment, short-term fluctuations in the market are normal.” Yu Liang emphasized that enterprises must recognize the general trend.

Market differentiation is obvious

However, in the overall positive market expectations, the emergence of differentiation is considered to be a major feature of the future real estate recovery, and real estate executives are more concerned about this.

“We judge that the confidence of residents and consumption will take some time to recover. Not all cities are recovering at the same time. Generally speaking, the markets of first-tier cities and high-level second-tier cities are relatively stable, and some relatively weaker cities. Cities are still under pressure.” Zhang Xuzhong, executive director and senior vice president of Longfor Group, said bluntly.

Yan Jianguo summed up the “three major differentiations” in the real estate market: market differentiation, industry differentiation, and enterprise differentiation. Enterprises continue to differentiate, and industry concentration will increase. In line with the trend of increasing market differentiation, China Shipping will further strengthen its focus on high-quality assets in high-energy cities and select the best from the best.

Zhang Yadong, executive director and chairman of the board of directors of Greentown China, also believes that the recovery of the industry is not synchronous, consistent and even, and has a tendency to diverge. This includes the differentiation of cities, enterprises, resources, and products.

Based on this, Greentown’s approach in the next few years will aim at “improving quality” and adhere to the nine-character corporate development policy – all-quality, high-quality and sustainable. Not only should the investment layout, rights and interests, and structure be comprehensively balanced, but also the connotative quality of sales should be improved, and assets such as houses and garages should be sold simultaneously.

Changes in the industry have also brought about a re-layout. Yang Huiyan, the new chairman of the board of directors of Country Garden Group, said that in the future, the company’s overall investment will focus on urban core variables such as population flow, industrial layout, economic foundation, and inventory status, and will further focus on the core locations of first- and second-tier core cities and third- and fourth-tier cities. Realize the benefits of incremental assets.

Mo Bin, President of Country Garden Group, also proposed at the performance conference that within 3-5 years, the company’s first- and second-line to third- and fourth-line goods value ratio will be increased to 50:50, and high-quality land resources will be used to support the company’s future performance. steady development.

Pay equal attention to business services

In the past, operating real estate was considered to have disadvantages such as being too heavy and too slow, but today, the market’s perception of this has gradually changed. With the development of logistics, commerce, rental housing REITs and real estate private equity investment funds, operating real estate has achieved a closed loop of “investment, financing, construction, management and withdrawal”, bringing the possibility of accelerated development of related businesses.

While doing a good job in the main business, how to explore or deepen the new development curve has become a problem that real estate companies have to pay attention to.

The topic Yu Liang most wants to talk about this year is also about the choice of new development models for the industry. He joked: “Sometimes I feel that there is often a bit of ‘split’. I just talked about a multi-billion cooperation, and then I will talk about a business worth hundreds of thousands.”

Operating business earns “long money, small money, hard money”. Yu Liang gave an example, the daily income per square meter of apartments is 80-100 yuan per day, the daily income per square meter of businesses is 6-10 yuan per square meter, the daily income per square meter of logistics is 1 yuan per square meter per day, and the daily income per square meter of real estate is 6 cents to 10 yuan per square meter. From billions to minutes.

China Merchants Shekou, which will perform steadily in 2022, has further clarified the direction of medium- and long-term transformation, proactively made business adjustments and strategic upgrades, and adjusted the original three main businesses into three types of business, namely development business, asset operation, and urban services. Efforts will be made to build a business structure that emphasizes both rental and purchase, combining light and heavy, and focuses on cultivating the company’s second growth curve.

Overseas Chinese Town, which has become a unique member of the central enterprise sequence through the integration of cultural tourism and real estate, also stated that it will further explore new development models in the real estate industry, grasp the general trend of industry development, and actively participate in engineering agency construction, affordable housing construction and other businesses to enrich the company’s income structure .

After more than a year of in-depth adjustments, the resilience and rebirth of real estate companies in the face of uncertainty are all reflected in the specific financial report data. From the completion of the restructuring and delivery of China Fortune Land Development’s overseas debt, to Kaisa’s resumption of trading, and to Sunac’s announcement of the overseas debt restructuring plan, good news is also coming.

The spring of 2023 is a new beginning.

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