Our reporter Wu Jing Lu Zhikun reports from Beijing.
With the closing of the Central Economic Work Conference, the trend of the real estate market in the new year has become the focus of attention from all walks of life in the industry.
Compared with 2018 and 2019, the meeting in 2020 listed real estate as a major item separately, and proposed "solving the outstanding housing problem in big cities" for the first time. The specific solution is to attach great importance to the construction of affordable rental housing.
Recently, Zhou Xing, general manager of the real estate operation division of Tianheng Group, accepted an exclusive interview with the reporter of China Business News to discuss how to solve the problems in the leasing market, how to innovate the urban renewal business and the subsequent impact of real estate regulation from the perspective of practitioners.
Zhou Xing, General Manager of Tianheng Group Real Estate Operation Division
Maintain the stability of the rental market
As an important part of the long-term mechanism of real estate regulation, the stability of the rental market is related to people’s livelihood and well-being. The Central Economic Work Conference in 2020 paid a lot of attention to the rental market, which mentioned that to solve the outstanding housing problem in big cities, we should adhere to the positioning that houses are used for living, not for speculation, and take measures according to local conditions to promote the stable and healthy development of the real estate market.
Compared with previous years, the meeting in 2020 particularly emphasized the need to attach great importance to the construction of affordable rental housing, speed up the improvement of the long-term rental policy, gradually make rental housing have the same rights in enjoying public services, and standardize the development of the rental market.
At the same time, in terms of land supply, it is necessary to tilt towards the construction of rental housing, make a separate plan for rental housing land, and explore the use of collective construction land and idle land owned by enterprises and institutions to build rental housing. Both state-owned and private enterprises should play a functional role.
In addition, it is necessary to reduce the tax burden of rental housing, rectify the order of the rental market, standardize market behavior, and rationally regulate the rent level.
Zhou Xing believes that solving the contradiction between supply and demand is the key to stabilizing the rental market. The country’s positioning of the rental market has always been very clear. As early as 2016, the policy level began to clearly encourage the development of the rental market. In August 2017, the former Ministry of Land and Resources and the Ministry of Housing and Urban-Rural Development issued the "Pilot Program for Building Rental Housing with Collective Construction Land", which determined the first batch of pilot projects to build rental housing with collective construction land in 13 cities including Beijing and Shanghai.
At that time, all kinds of capital also increased the layout of the leasing market, especially in the field of long-term leasing. However, in the following years, some long-term rental apartment operators competed for housing at high prices in order to quickly occupy the market, "high income and low rent" and excessive use of financial leverage, which led to the explosion of platforms and social conflicts. Especially in Danke Apartment in 2020, long-term rental apartments are facing a serious crisis of social trust.
Zhou Xing pointed out that these events are typical of the early development of an industry. "These enterprises have expanded too fast in their own operations. Originally, their own financial strength was only enough to make 100 houses. They had to quickly occupy the market to make 1,000 houses, which could only be achieved by excessive use of financial leverage, which eventually led to thunder."
In addition to excessive use of financial leverage, he also pointed out that these platforms also have problems in the selection of properties. "Not all houses are suitable for long-term rental products. Long-term rental apartments need to meet a number of conditions before they can try, the first of which is that the cost of the project itself is low. "
Reducing the cost of land acquisition is a direct measure to control the project cost. At present, several cities have tried to develop collective land for lease. Due to the low acquisition cost of collective land, the pressure on the later operation of the leasing format with small profits can be alleviated to some extent.
"From the perspective of the whole world, the long-term rental market is a long-term and small-profit industry. All industries with small profits are very strict in cost requirements, and both property costs and operating costs must be strictly controlled." Zhou Xing said, "In fact, it is very difficult to locate a good long-term rental project, because it is necessary to coordinate factors such as cost, transportation, specific housing needs, and subsequent rental rate and operation and maintenance costs."
At the same time, the house itself is asset-oriented, and the long-term rental apartment project needs a lot of long-term and low-cost funds to achieve benign operation. "There must be such funds in the whole society, but appropriate financial instruments are needed to match them." Zhou Xing suggested that if we want to promote the development of the leasing market, we need corresponding financial products and system adaptation.
Previously, REITs products with high voice are mainly used in public construction and infrastructure fields, and the project yield is more than 4%. At present, long-term rental apartments need to be strictly controlled in many links to achieve such a yield. "It is still difficult." Zhou Xing thinks.
The lack of corresponding financial instruments is an important reason that restricts the large-scale replication of the long-term rental model. Zhou Xing said: "I believe that with the increasing attention paid by the state to the leasing market, there will be corresponding financial innovations in the future."
From the perspective of participants, Zhou Xing believes that the leasing market should be "full of flowers". "There must be government-led projects, private enterprises and individuals, and the housing needs are diverse. This market also needs a variety of solutions." However, in any case, the government’s corresponding supervision must keep up. For example, many cities have set up special fund supervision accounts for long-term rental apartment enterprises to limit the excessive use of financial leverage by enterprises.
The "three red lines" have obvious short-term impact on the industry.
Compared with the previous policy regulation, at the end of August 2020, the "three red lines" proposed by the regulatory authorities for the financing of housing enterprises were interpreted by many people in the industry as "fierce drugs" to stabilize the real estate market.
The so-called "three red lines", that is, the asset-liability ratio after excluding advance payments shall not be greater than 70%, the net debt ratio shall not be greater than 100%, and the cash short-term debt ratio shall not be less than 1 time. According to the "three red lines", the regulatory authorities will divide the pilot housing enterprises into four grades, and the upper limit of the growth rate of interest-bearing liabilities will increase by 5% for each grade reduction.
Zhou Xing believes that the "three red lines" regulation is very accurate. "The’ three red lines’ are actually in charge of the financial industry, that is, to strictly control the financing behavior of housing enterprises in financial institutions. In the short term, it will have a big impact on all housing enterprises, especially highly leveraged enterprises, which can be seen from some performances in the capital market. "
At the same time, the competition pattern of the follow-up industries is also facing new changes. "The change in the seating chart of (real estate enterprises) will not be as drastic as before." Zhou Xing believes that in the previous stage, some enterprises in the real estate industry increased leverage relatively quickly, achieving rapid expansion and catching up with the industry. But with the gradual implementation of the "three red lines" policy, the concentration trend of the industry will gradually slow down. "Because it is difficult for housing enterprises to rely on debt to expand their scale, there are fewer opportunities to catch up quickly."
But objectively, he believes that such a policy will gradually promote the healthy development of the real estate market. "As the largest industry in China, the real estate industry is closely related to the financial industry and plays a self-evident role in the stable development of the economy."
Urban renewal tests the comprehensive strength of enterprises
Consistent with the government work report in 2020, in the Central Economic Work Conference at the end of the year, the renovation of old residential areas was put into the section of promoting domestic demand. When deploying the work related to "persisting in expanding domestic demand", the meeting said that it is necessary to implement urban renewal actions, promote the transformation of old urban communities and build a modern logistics system.
In fact, with the arrival of the era of real estate stock, in cities such as Beishangguangshen and Shenzhen, obtaining projects through urban renewal has become one of the important ways for many housing enterprises to participate in urban development.
However, compared with the previous real estate development, the connotation of urban renewal is richer. In terms of development logic, Zhou Xing believes that enterprises should understand that "urban renewal occurs with the adjustment and upgrading of urban functions, and in fact the biggest dominant party is the government".
Based on this, he proposed: "Urban renewal is not a simple project, even a single project of urban renewal should be considered in the overall layout of the city. Therefore, urban renewal has a strong policy. It is not the will of an enterprise, but the overall improvement of the city as the core. "
When many factors are taken into consideration in urban renewal, the development difficulty will also increase. Take the challenging office, business and public space products as an example, these transformations need to be suitable for all kinds of people in the same space. Zhou Xing explained: "For example, if the commercial transformation involves the change of land nature, is the property right flawed?" Are laws and regulations allowed? Can the new use be approved by the government? Therefore, the actual operation must match the policy environment, laws and regulations, and the process is still very complicated. "
This also means that urban renewal is an area that tests the comprehensive strength of enterprises. He believes that when enterprises participate in urban renewal, they need to be very familiar with local policies and regulations, as well as human history and development context. In addition, most urban renewal projects have a long development cycle. "So enterprises need to have strong financial strength, at least a lot of long-term funds."
(Editor: Lu Zhikun Proofreading: Yan Jingning)
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