Long-rent apartment with difficulties in internal and external affairs.
Editor’s note: This article is from Zhongxin Jingwei, author Li Yujia.
In the near future, long-term rental apartments have difficulties in diplomacy. Lejia Apartment stopped operating, Vanke admitted that long-term rental apartments suffered losses, the developer department began to divest long-term lease business, the entrepreneurial department turned to light asset operation, the pace of expansion of most platforms was slowed down or even contracted, and the policy also bid farewell from top to bottom. The support of many parties, etc., cast a shadow over the prospects of long-term rental apartments.
In 2019, the long-rent apartment industry continued to be in a calm period and rectification period after the overheating. At present, the biggest problems facing long-term rental apartments include: rents have increased, but services and experiences have not kept up, mature and stable profits. The pattern has not surfaced. In the future, the sustainable development of the long-term rental apartment industry will have to reduce costs and make up the shortcomings of management from the source. How to reduce costs? The effective use of idle commercial offices, industrial plants, collective construction land, etc. is the key to exploring profitable and sustainable operation models. How to make up the management short board? With the arrival of stocks such as leasing and second-hand housing transactions, local government management departments should adjust their trends and turn to stock regulation. The root cause of the unstable lease order is that government supervision is not in place.
Long-term rental apartment enters a quiet period and rectification period
In 2019, the situation changed a lot for long-term rental apartments.
First, policy orientation shifts from uninterrupted support policies to stability and regulation. This is because, since 2018, there has been a lot of chaos in the rental market. For example, some long-rent apartment platforms “running the road”, “explosive mine”, quality problems (formaldehyde room), order problems (special rent, pinhole camera, etc.), financial risk issues (rental loans).
Second, the long-rent apartment market has also begun to shift from overheating to calm. Since 2016, the policy dividends for supporting leasing throughout the country have been increasing, and the “Internet +” and “window” of sharing economy are booming, and housing leasing is favored by capital. In 2017-2018, various institutions entered the leasing market in a big way. The four main series of developers, entrepreneurship departments, intermediaries, and hotels were very strong in “receiving land and collecting land”, resulting in a significant increase in rents. According to the statistics of the Shell Research Institute, when the institutional housing expansion was the fastest in 2018, the rents of hotspots in first- and second-tier cities increased by about 10% year-on-year, and some cities increased by more than 20% year-on-year.
In 2019, the rental expansion of the rental agency began to be placed on the market. At the same time, since 2018, the state has emphasized the need to establish two housing systems (market + guarantee), and the government’s public rental housing has also begun to exert its strength. Coupled with the hot property market in recent years, commercial housing, various types of apartments (commercial housing and “class housing”) are also heavily invested in the rental market. As a result, rents have stabilized or even declined. In July this year, first-tier cities rentedVery stable, Shenzhen and Beijing only rose by 1% year-on-year, while hot second-tier cities generally fell by about 3%.
That again, the long-term rental apartment platform bid farewell to the rapid expansion and enter the reconfiguration period. In recent years, developers have entered the rental market, and the expansion plan for the property is magnificent. But now, the marginal effect of the early policy dividends has weakened. Under the measures of cracking down on “real estate rents” and establishing rents, the policy has turned to industry consolidation. At the same time, rents have slowed down, public rental housing and talent rentals have diverted demand, superimposed capital is no longer heavily invested, and long-rent apartment platforms have begun to differentiate and restructure.
One is that some companies in the “Developers Department” divested the leasing business, but did not propose to divest, but also stopped the expansion of housing. For example, Vanke stopped the “Million Village Plan” indefinitely. Ocean Real Estate and Landsea Real Estate clearly stated that the long-term rental apartment was divested in 2019; the second was that the “intermediary department” shifted from heavy asset holding operation to light asset management output. For example, the author’s research on the World Union Red Dragonfly Apartment, as the largest leasing platform of the intermediary department, Hung Hom’s 2017 house storage and storage reached 100,000 sets, and plans to reach 500,000-600,000 in 2020. But now, in most cities in the Pearl River Delta, Hung Hom has stopped the expansion of its properties and turned to the light asset business of export leasing management. Similarly, the “entrepreneurial department” (YOU+, Rubik’s Apartment, etc.), which will tell the story of the most emotional story, began to “avoid the reality” and began to transform into a light asset operator, focusing on the community culture and operation management of renting customers. And other value-added services; third, the industry mergers and acquisitions reopened. In the first half of this year, eggshell apartments, Gulfstream International Community, Mai Yue and other branded apartments have acquired.
The development of long-term rental apartments faces two “pain points”
At present, there are two biggest problems in the long-term rental apartment industry. First, long-term rental apartments have generally raised rents, but the service and user experience have not been upgraded simultaneously, but exposed a series of problems. According to the survey, long-term rental apartments have high requirements on the location of the housing (generally in the central area or subway station), the cost of housing is high, and the market rent is followed. Some companies are expanding their market share, even higher than the market rent ( Such as the recent “explosion” Lejia apartment). At the same time, after the house is renovated, upgraded, managed and operated, and office equipment, the investment is also very large. Therefore, the rent of long-term rental apartments is generally 10%-20% higher than the surrounding rented houses, and some even 50% higher. However, long-term rental apartments do not reflect their advertised customer experience and personalized service tags.
In the year of 2018, the Shanghai Consumer Protection Committee accepted 3,167 complaints about long-term rental apartments, a year-on-year increase of 2.2 times. The most concentrated complaints are the funding problem. In violation of the deposit refund agreement, misleading the tenant to make loans to third-party financial institutions, it is easy for the tenant to face personal funds or credit risk. According to the “2017-2022 China Short-term Apartment Market Trends and Development Forecast Report” released by Zhiyan Consulting, 80% of long-term rental brands are currently in the mid-end market, and competition is becoming more and more intense. Although there are quite a few roomsEnterprises began to lay out high-end long-term rental apartments, but compared with real high-end serviced apartments, most high-end apartments made by real estate companies are actually a compromise between white-collar apartments and high-end serviced apartments.
According to the author’s research, the software and hardware facilities of the brand long-term rental apartment have improved compared with the same type of commercial housing. For example, some are equipped with gyms, bookstores, coffee shops, self-service kitchens, social areas, etc.; some provide 24-hour food delivery, on-call personal care, express delivery services. In the centralized long-term rental apartment community, the environment has indeed improved. However, there are still many “hard injuries” in long-term rental apartments. For example, the heavy form does not pay attention to service, the picture and the physical gap are large, the public facilities are not fully equipped, the damage is normalized, the maintenance is not in place, the quality of the cleaning staff is uneven, the indoor living facilities are aging, and there are even cases of collecting water and electricity charges. One case that the author encountered was that the indoor facilities such as the toilet were damaged. There was no rule to determine whether it was natural damage or damage to the tenant. The maintenance fee was paid by the tenant or the platform. In particular, some long-term rental apartments are based on the “two-room east” model. Fundamentally speaking, the long-term rental apartment, a subdivision of the housing industry, is still in the stage of extensive development, and industry management standards have not yet been formed.
The second big problem in the long-term rental apartment industry is that despite the multi-party policy support, the industry is actively exploring and now hatching leading enterprises, but it is still not in other areas such as travel, food, shopping, etc. In the same way, there are well-recognized, stable and mature profit models and sustainable development paths. According to the Nanfang Daily’s survey of the Guangzhou Real Estate Leasing Association, the cost of taking the house is deducted (more than 60%), the cost of decoration (about 10%-20%), and the cost of tax (10%-20%, including VAT, lease comprehensive tax, etc.), most long-term apartment companies reflect their strict profit margins as low as 3%-4%, which is lower than the average bank wealth management income. When the occupancy rate is lower than 90%, Will lose money.
At present, the development of the rental market and long-term rental apartments, whether it is the policy system, industry management, business operations, etc., have reached the bottleneck period. The author believes that with the establishment and improvement of a “positioning (not living), two systems (market + guarantee)”, and the establishment and improvement of a new housing system for “rental and purchase”, the rapid rise in housing prices will become history. When the rise in housing prices is expected to slow down, the population of renting will naturally increase (you don’t have to hurry to buy a house). In addition, the future population will migrate to metropolitan and urban circles, especially after the 90s and 00s, and other new generations will enter the society. The housing rental demand will rise rapidly under high housing prices.
Reducing costs and making up the “management short board” are two breakthrough paths
In June, Xinhuanet and the long-term rental platform jointly released the “Chinese Youth Renting Life Blue Book”, showing that by 2021, the proportion of long-term rental apartments in cities will increase by 2-5 times, Beijing, Shanghai, The institutionalized proportion of the three cities in Shenzhen will reach or even exceed 30%, that is, every 3 tenants in the futureOne of the lieutenants will sign a contract with a long-term rental apartment, and institutional long-term rent will become the choice of more and more rental people. However, the ambitious goal has to wait for a breakthrough in the reform level. At present, the key is to solve the development pains of long-term rental apartments. To solve the problem of profit model and sustainable development, the key is to reduce costs from the source and make up the shortcomings in management.
The state has clearly stipulated that idle commercial offices, industrial plants, and collective construction land can be used to build rental housing. The cost of this part of land and housing is the lowest, and the location advantage is also prominent. This is also the long-term rental apartment to say goodbye to the traditional channel profit model such as “price difference, rent increase, and partition” to solve the important breakthrough of profitability and unsustainability. However, according to the author’s investigation, there are several major problems in the path of the above-mentioned stocks. First, the transformation involves planning adjustment. According to the national policy, the premise of stock reform is to comply with the plan, and the planning adjustment involves the willingness of the land use and the public support.
But there are many obstacles, whether it is the willingness to use the land or the public support. For example, the landlord may wish to develop commercial housing instead of renting; public facilities such as education and medical care cannot be landed at all, or the funds that can be settled cannot be solved. Then, how to establish a mechanism for sharing benefits between long-term rental apartments and the original land use owners, how can the government provide support in planning and supporting? The second is the issue of firefighting “difficult to pass”. The fire protection requirements of residential buildings are much higher than the fire protection requirements of commercial offices and industrial plants. Apart from demolition and reconstruction (rebuilt according to residential standards), it is difficult for the stocks to be approved by the fire department. The author investigated some of the similar long-term rental apartment projects, and the management staff said that fire protection is one of the biggest obstacles.
At present, some cities do not disguise in the form of government meeting minutes, or invite fire departments to participate in the transformation and design. The author believes that the most crucial thing is to establish the relevant standards for stock transformation from top to bottom, especially the key nodes such as planning adjustment, supporting landing, fire inspection and acceptance, and require local governments to clarify the policy guarantee and the duties of relevant departments in the lease development plan. . In addition, the land or houses rented by long-term rental apartments are not property rights recognized by the financial sector, and there are obstacles to mortgage financing. Revising relevant regulations and granting leasehold property rights is also an aspect to solve the long-rental apartment company’s demands. Finally, when real estate enters the era of stocks, the responsibilities of the housing and construction departments should be adjusted to shift to the supervision of stocks including leases and second-hand housing transactions.