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Source | Zhibenshe (ID: zhibenshe0-1)

Author | Kiyoshi Kazuo President & President

Title Map | Visual China

In 2019, Shenzhen performed a song of “Song of Ice and Fire”:

In the past, there was a national strategic deployment and the economist Zhang Wuchang ’s hopes for the “Economic Center of the Earth”. Later, there was the discomfort of the sudden “stall” of the economy and the question of “hollow industry”; After the Guangdong Sub-district Office, Huawei was caught in the whirlpool of public opinion and became the target of criticism.

Figure: 2010-2019 first three quarters of Shenzhen GDP (red line) and national GDP growth rate (blue line), source: Intellectual Property Agency

If you look closely, Shenzhen ’s economy has a scene of “the double world of ice and fire”:

On the one hand, the economic growth rate has fallen too fast, and on the other hand, housing prices have led the way;

On the one hand, the rapid growth of state-owned investment, on the other hand, the substantial decline in private investment;

On the one hand, the economy of Longhua District has fallen into low growth, rents have risen, and factories have moved outside; on the other hand, Nanshan continues to maintain high growth, and the Bay Area plate is hot;

On the one hand, luxury homes and new listings have provoked the purchase of thousands of people, the sales scene is hot, and the price is tens of thousands of flats. On the other hand, the vacancy rate of office buildings has continued to rise, and the momentum of business closures, closures, and rent-outs has not decreased.

What happened in Shenzhen?

Irish economist RichardDe Cantilon once pointed out in his famous “Introduction to the Nature of Business”: “Landowners determine the population and market price of a country.”

In fact, Shenzhen, which has a lot of land, can roughly predict or perceive the future of the city from its land policy and real estate market. This article looks at the problems and future of Shenzhen’s economy from the perspective of real estate.

01. Shenzhen’s past: housing, or manufacturing?

Everything has to start with house prices.

Since 2015, Shenzhen has led a new round of general housing price increases across the country. In 2015, the average price of the Shenzhen property market rose from 23,900 in the previous year to 33,400; in 2016, it continued to rise to 53,400.

The regulation began at the end of 2016. For more than two years since then, house prices in Shenzhen have been in a sideways state, and the transaction volume of new homes has rapidly contracted.

In two years, Shenzhen’s housing price doubled, the average price rose by 30,000 yuan a square meter, the market was surprised, many people were puzzled.

In the beginning, a reasonable explanation for the surge in housing prices in Shenzhen was a serious imbalance between supply and demand, that is, there was too little land supply for development in Shenzhen.

Shenzhen covers an area of ​​1997 square kilometers, only 12% of Beijing. Shenzhen’s resident population is 1302, plus the floating population should be around 20 million. Shenzhen’s population density is greater than that of Beijing, Shanghai, and Guangdong.

In 2005, Shenzhen issued the “Administrative Regulations on Shenzhen’s Basic Ecological Control Lines”, which designated 974 square kilometers as unexploitable, occupying nearly half of the area. This means that Shenzhen has only 1023 square kilometers of land available for development. Based on this calculation, the actual population density of Shenzhen may reach 20,000 per square kilometer, which is already one of the largest cities with the highest population density in the world.

Of these 1023 square kilometers, the area completed in 2016 has reached 923.25 square kilometers. In other words, starting from 2016, if the old reform is not considered, the newly-added land area that Shenzhen can use does not exceed 100 square kilometers.

Of the completed urban areas in Shenzhen, 2014 data show that industrial logistics land accounts for 34%, residential land accounts for 24%, transportation facilities land accounts for 20%, business services land accounts for 5%, and public service facilities land accounts for 6 %, Others accounted for 11%.

It can be seen that residential land in Shenzhen only accounts for 11% of the entire city area. Compared with international cities, thisThe figures are surprisingly low, with residential land in London, New York and Tokyo accounting for over 50%. This figure is only slightly higher than Hong Kong (8%).

However, Shenzhen ’s land and land conflict has a long history, so why has the house price doubled in a short time in 2015?

It was not until November 2017 that Shenzhen announced the “Thirteenth Five-Year Plan for Urban Construction and Land Use of Shenzhen City (2016-2020)”, and people suddenly realized.

The “Thirteenth Five-Year Plan” should have been formulated in 2015 and implemented in 2016, but it has never been announced. This time point is in line with the surge in Shenzhen house prices.

This document states:

1. By 2020, the basic ecological control line of Shenzhen will remain unchanged, that is, not less than 974 square kilometers.

2. By 2020, the total scale of construction land in Shenzhen will be controlled at 1004 square kilometers (on the basis of 1023 square kilometers, 20 square kilometers of basic farmland will be allocated).

3. By 2020, the proportion of industrial land in construction land in the city should not be less than 30%, and the “Industrial Land Red Line” of 270 square kilometers has been demarcated.

This means that by 2020, 50% of the land in Shenzhen will not be exploitable, 30% of the land will be allocated to industry, and the remaining 20% ​​will be jointly used by residential, commercial, transportation, and public service facilities.

Fourth, by 2020, use various methods to release 253 square kilometers of land supply.

Including 87 square kilometers of new construction land, 58 square kilometers of retired construction land, 30 square kilometers of urban renewal land (12.5 square kilometers of demolition and reconstruction), 50 square kilometers of land preparation land, and 12 surrounding seas for farming 28.2 square kilometers.

This shows that there is almost no land for development in Shenzhen. Of the 253 square kilometers of land, 166 square kilometers come from old reform and reclamation.

Photo: Land available for development in Shenzhen, source: Zhibensha

Using 253 square kilometers, excluding 30% of industrial land, Shenzhen has only 177 square kilometers of land available.

According to the “Thirteenth Five-Year Plan”, the land for comprehensive transportation is not less than 20.78 million square meters, the land for municipal facilities is not less than 2.25 million square meters, the land for ecological protection is not less than 560,000 square meters, and the new land for medical treatment is not low. With an area of ​​680,000 square meters, the educational land is not less than 2.5 million square meters, the cultural and sports facilities are not less than 820,000 square meters, and the land for social housing is only 310,000 square meters.

177 square kilometers of land minus the total size of the above land, leaving only 149 square kilometers. How much of this is residential construction land, this plan does not specify.

Picture: Shenzhen residential land, source: Zhibensha

However, during the “Thirteenth Five-Year Plan” period, the document plans to achieve an effective supply of 650,000 new homes in the city; of which 300,000 new commercial housings are approved for pre-sale and current sales, and 350,000 housings are guaranteed and affordable. .

There are two issues worth paying attention to here:

One is that a lot of new land comes from demolishing old and new buildings, and the supply of real dwellings will not be too much.;

Second, Shenzhen’s medical, education, and sports are shortcomings. In recent years, a large number of hospitals and schools have to be built, especially high schools, high-level universities and high-quality hospitals. Therefore, land for medical treatment, education, and sports is bound to occupy residential land, and the supply of commercial housing is still not optimistic.

The above is just a plan, let’s look at the actual data:

From 2012 to 2017, only 8% of the newly added 7 million square meters of commercial and residential industrial land supply in Shenzhen.

In the first eight months of 2017, Beijing and Shanghai respectively supplied 3.59 million and 3.22 million square meters of residential land, Guangzhou launched 1.64 million square meters, and Shenzhen had zero supply of pure residential land throughout 2017. Renting and not selling “residential plots of only 20,000 square meters).

Shenzhen’s residential land supply (including talent room) was only 158,000 square meters in 2018; in the first half of 2019, Shenzhen’s residential land supply was also zero supply. Until June, Shenzhen only launched 5 residential land with a total area of ​​170,000 square meters. These five plots of land are only talented houses with a three-year sale limit. The land is located in Baoan Xixiang, Longhua Minzhi, Guangming District and Pingshan District.

Compared with “poor” residential land, Shenzhen “big hand” launched industrial land. In November this year, Shenzhen launched 30 square kilometers of industrial land at one time. What is this concept? The area of ​​Shanghai is more than twice that of Shenzhen, and the newly added industrial land during the 13th Five-Year Plan period is less than 30 square kilometers.

The extremely insufficient supply of residential land is the root cause of the persistently high housing prices in Shenzhen.

Let’s look at demand again.

Compared with other cities in the country, Shenzhen is special because it is an immigration city, which is quite attractive to young people in all provinces across the country.

Figure: Growth rate of Shenzhen’s resident population from 2012 to 2018, source:Jibonsha

From the data point of view, in recent years, the number of newly-added population in Shenzhen has exploded, ranking first among major cities in the country. Shenzhen’s resident population was 10.55 million in 2012, 80,000 in 2013, 150,000 in 2014, 600,000 in 2015, 530,000 in 2016, 550,000 in 2017, and 56 in 2018 Million.

Shenzhen’s large-scale new population each year is an expanding rigid demand market. The sudden increase in urban population in 2015 and 2016 coincided with the rapid rise in housing prices.

Shenzhen is the city with the lowest degree of purchase restriction in Beijing, Shanghai, Shenzhen and Shenzhen. This is mainly because Shenzhen’s household registration threshold is the lowest in these four major cities. As long as you have a full-time bachelor degree and purchase social security in Shenzhen, you can directly enter the household. Shenzhen has also launched a “second approval” policy, which can be completed within 20 working days. In order to attract talents, the Shenzhen Municipal Government also gave a subsidy of 15,000 yuan; at the same time, the Longgang District and Baoan District Governments added an additional subsidy of 15,000 yuan for a total of 30,000 yuan.

This open hukou policy is equivalent to opening a huge mouth for Shenzhen’s home purchase demand and funding sources.

Most of the new 500,000 people are young people, and many are college graduates. If 8,000 of them came to Shenzhen to buy a house with their parents’ money (including loans), this would be a crazy fund. The demand for 8000 suites is 640 billion if the total price of one suite is 8 million. You know, in the first half of this year, Shenzhen’s new home sales volume was only 17,000 units.

It can be seen that the housing prices in Shenzhen are held by young people across the country carrying their parents’ down payment and their monthly entrustment.

Picture: The number of students in Beishang Guangshen Primary School in 2008 and 2018, source: Zhibensha

In addition, young people in Shenzhen are at the peak of marriage and childbearing. From 2008 to 2018, the number of primary school students in Beijing increasedIt grew by 38.3%, Shanghai increased by 35.5%, Guangzhou increased by 22.7%, and Shenzhen increased by 75.5%.

In 2018, the number of primary school students in Shenzhen reached 1.02 million, surpassing Shanghai and Beijing, and only less than 30,000 in Guangzhou. Shenzhen has more than 2 million elementary and middle school students and children in the park, the first of the four major cities. The rapid increase in the number of students in Shenzhen is the main driving force for the rapid growth of degree rooms.

In fact, free registration, free home purchase and education are the rights of everyone. The influx of young people across the country into Shenzhen shows that the city is attractive enough; the large number of newly added and born people is the city’s future hope. The problem is not the strong demand, but the extremely short supply.

So many people come to Shenzhen with so few listings, and a large number of young people can only live in urban villages. Of the 10.71 million housing units in Shenzhen, 73.5% of the houses are for lease, and 62% of them are for rent in urban villages. At present, 80% of the renters in Shenzhen have rented about 16 million people, of which 11 million live in urban villages.

So, the objective shortage of land and the huge supply-demand gap caused by man-made causes led to a sharp rise in Shenzhen’s housing prices in 2015 and high housing prices.

Shenzhen ’s land is scarce, but why is it such a “big deal” for industrial land, but how is it “ridiculous” for residential land?

Why is Shenzhen so harsh on the drifters?

02. Shenzhen Now: Assets or Growth

Why doesn’t Shenzhen increase the supply of residential land?

This is really puzzling. Compared with most cities, Shenzhen’s land financial dependence is not high, local taxes and fiscal surpluses are considerable. What is the driving force for rising house prices?

First, the needs of financial cities (larger assets);

Second is the pressure of strategic deployment (maintain growth);

The third is the need for an industrial city (Part III analysis).

Let’s look at the needs of financial cities first. I used to be in In-depth real estate | How to get the property market without housing? ” states: “Shenzhen and Shanghai are not highly dependent on land finance, but In order to maintain financial assets and status, neither city can tolerate falling house prices. This is determined by the source of credit for finance. “

Real estate and land are the backbone of the financial system and the most important collateral for financing. The world’s huge amount of financial assets are all built on the cornerstone of real estate and formed through layers of leverage and securitization. The valuation of real estate determines the starting line of financial cities. World financial cities such as New York, London, Tokyo, Hong Kong, and Singapore are all cities with high housing prices.

For example, 5 million bought a house in Shenzhen, rose to 10 million two years later, and then mortgaged it to obtain a loan of 6 million, which was then invested in the financial market or industrial investment.

We usually say that “not using real estate as a means to stimulate the economy in the short term” is even more terrifying than using real estate as a means to stimulate the economy in the short term. It is to use real estate as a tool to enlarge financial assets in the long run. In this way, house prices in this financial city will continue to remain high.

Under normal circumstances, the tree will not rise to the sky. The real estate market is cyclical, and house prices will fall to a certain extent. However, if human intervention, such as strict control of land supply and monetary stimulus, is likely to lead to long-term distortion of the real estate market, housing prices continue to rise.

The United States has done just that. During the Great Depression of the 1930s, the federal government borrowed from low-income people to buy a house by overdrafting national credit for the purpose of saving the market. This move gave birth to a low down payment ratio and installment purchase mode.

By the end of the 1960s, the federal National Mortgage Association, which had been used to rescue the city, turned into the famous Fannie Mae. With the rise of investment banks, real estate has gradually evolved into a tool for long-term growth of financial assets, and has since embarked on the road to securitization.

In 1968, the first mortgage-backed securities (MBS) was born in the United States. In the first quarter of 1970, the size of US mortgage securitization was $ 46 billion. By the third quarter of 1974, this number had exceeded 100 billion.

Since the 1980s, Reagan, President Clinton, and Fed Chairman Greenspan worked hard to promote the financial mix. Since then, the US real estate and financial markets have ushered in an epic bull market that has lasted for more than 20 years. Prior to the outbreak of the crisis, the size of institutional MBS reached nearly US $ 8 trillion, and US house prices, stock market value, and financial derivatives scaleReached historical peak.

After the financial crisis broke out, the U.S. Federal Treasury and the Federal Reserve actively rescued the market, took over the “two houses”, and rescued giants such as Bear Stearns and AIG. The Fed has even bought mortgage securities directly in the market and has accumulated trillions of dollars. These bailouts helped the US stock market rise against the trend, and US real estate began to rebound in 2012. Today, the US stock market and house prices are at historic highs.

At this time, real estate, like the Great Depression, has become a tool for stimulating the economy in the short term.

From the Great Depression to the present, the United States has explored a set of real estate financial gameplay: short-term growth growth and long-term growth of financial assets alternate rotation. When real estate is used to expand financial assets in the long run, it is reused as a means to stimulate the economy and maintain growth in the short term. Repeatedly used in this way for nearly a century.

Investigate the reason: Man-made use of the market to create bubbles, and then blame the market.

Let’s go back to Shenzhen. Since 2010, China’s economic growth has entered an inflection point. On the whole, Shenzhen’s economic growth rate has fallen, which is consistent with the downward shift of the national economy, but the volatility of Shenzhen’s economy is significantly higher than the country as a whole.

China’s GDP growth rate broke through 10 in 2011, directly broke through 8, and broke through 7 in 2015. In the first three quarters of this year, the economic growth rate was 6.2% year-on-year; in the third quarter, the growth rate was 6%. The market predicts that the national GDP will likely break 6 in the fourth quarter.

Shenzhen ’s GDP growth rate also entered an inflection point in 2010. In 2010, the GDP growth rate was still 12%. In 2010, it fell directly to 10%, and in 2014 it broke through 9. However, during the four years from 2014 to 2017, Shenzhen’s GDP growth rate remained above 8%, which is stronger than the national growth rate. Why is that?

During the past four years, Shenzhen’s housing prices have doubled. Coupled with the leverage effect, Shenzhen’s financial assets have multiplied several times. The doubling of Shenzhen’s real estate and financial assets has provided financial convenience for physical investment, trade financing, and technology venture capital.

However, as the national economy continues to decline and the Sino-U.S. trade war deepens, Shenzhen ’s play of expanding financial assets through real estate has immediate side effects, and the economic growth rate has dropped significantly.

Shenzhen’s GDP growth rate broke through 8 in 2018, broke through 7 in the first half of 2019, and grew by 6.6% in the first three quarters of 2019. At present, Shenzhen has not released economic data for the third quarter. Although Shenzhen’s GDP growth rate in the first three quarters was still higher than the national average growth rate of 6.2%, it was also higher than the Guangdong province’s average growth rate of 6.4%, but the decline is too fast. Moreover, this rate of decline cannot be explained by periodicity and trade wars.

Bigging financial assets is essentially a debt-based economy. But when the economy is in a cyclical recession, the debt-based economy will accelerate its decline.

The leverage ratio in Shenzhen is significantly higher than that in Beijing. Shenzhen has more loans than deposits. Households have deposits of 1.381 trillion yuan and loans of nearly 2 trillion yuan. According to the 13.2 million permanent population, the per capita debt is 150,000 yuan; if the factor of deposits is taken into account, the per capita net debt in Shenzhen is 44,000 yuan.

The situation in Shanghai is the opposite of Shenzhen. Shanghai households have more deposits than loans. Shanghai households have deposits of 2.857 trillion and household loans of 2.22 trillion.

Among them, Shenzhen’s housing loans accounted for the majority, and Shenzhen’s household loans accounted for about 99.7% of loans. Shanghai announced a housing loan of 1.33 trillion yuan. The proportion of housing loans in loans is much lower than that of Shenzhen, only 60%.

The crowding out effect of housing loans on consumption is also very obvious. 30% of Shenzhen’s income is used for mortgages and rents. The total retail sales of Shenzhen in 2018 was 616.8 billion, which is quite different from the total retail sales of 925.6 billion in Guangzhou. The reason is that, on the one hand, the wholesale market in Guangzhou is huge, which has increased the total retail sales; on the other hand, the proportion of Shenzhen’s residential spending is too high, which has weakened consumption capacity. Housing prices in Shenzhen surged in 2015, and the growth rate of total retail sales of consumer goods fell sharply to 2%.

Figure: Total retail sales and growth rate of social consumer goods in Shenzhen, 2014-2018, source: Intellectual Property Agency

When the economy stalled, Shenzhen real estate switched from long-term growth of financial assets to short-term growth protection. The real estate’s rising momentum was released, and the imbalance of long-term supply in the market triggered a “dragon fill” (Song Dingyu) drama.

Beginning in the first half of this year, both new and second-hand housing transactions have started to increase. Although the supply of new properties in Shenzhen this year isSignificant increase, but far from meeting market demand.

In addition, many of the real estate opened this year are large luxury homes, which do not match the market demand. In the first half of this year, new luxury homes, such as Shenzhen Industrial City, OCT Neuschwanstein, and China Resources Vientiane Mansion, were snapped up. It was difficult to find a house with a price of more than 100,000 yuan per square meter.

Surely, new homes in Shenzhen have become investment products, and players are just a handful of people. The rare and popular first-hand housing market has pushed most of the demand for home purchases into the second-hand housing market, which has led to a rise in the volume and price of second-hand housing.

In April 2019, Shenzhen second-hand housing transactions returned to over 7,000 units, an increase of 37.7% year-on-year, and reached a new high in 16 months; in May, 4,605 ​​new house transactions, a new high since 2016 regulation. Starting in September, Shenzhen second-hand housing rose for three consecutive years. Data from November showed that the sales price of second-hand housing in Shenzhen rose by 1.4% month-on-month, while Shanghai remained flat, while Beijing and Guangzhou fell by 0.4% and 0.2%, respectively.

From January to November 2019, the price of second-hand housing in Beijing, Shanghai, Guangzhou and Shenzhen rose, source: Intellectual Property Agency

The fire in the Shenzhen property market is the concept of the Greater Bay Area, the demonstration area, and a series of policies that are better than the property market. The Greater Bay Area and Demonstration Area attracted nationwide funding to the Shenzhen property market. Beginning in the second half of the year, there were many “epic-level soil auctions” in Shenzhen, and land auction revenue hit a record high. Some owners and intermediaries use the WeChat cluster to control the disk to drive up the price.

With the rapid decline in economic growth, the pressure on Shenzhen to maintain growth this year has increased significantly. Especially after the strategic deployment of the leading socialist demonstration zone with Chinese characteristics was issued, Shenzhen has successively introduced a series of measures that are good for the property market:

Adjustment of the luxury house tax collection standards directly led to a sharp rise in second-hand housing transactions; the cancellation of the “rent and no sale” policy for commercial apartments greatly activated the commercial apartment market; and the thawing of the commercial housing market in Shenshan New District raised the market’s response to rising house prices expected.

Ensuring growth in real estate is not enough,It also includes the promotion of state investment, especially infrastructure. In the first three quarters of 2019, Shenzhen’s average investment growth rate was 17.9%, of which state-owned investment growth rate was more than 40%, while private investment growth rate was only 3%.

Shenzhen is a typical private capital economy. Nowadays, the growth rate of private investment is so low, and the growth rate of state-owned investment is extremely high. Many of them come from infrastructure investment. In the first half of this year, Shenzhen’s infrastructure investment surged 48%.

This year, Shenzhen ’s road digging has reached a new height. Citizens are repeatedly digging no matter where they drive or walk. The “Shenzhen Road Digging” web search index has risen sharply.

Under the model of long-term growth of financial assets + short-term insurance growth, the economic stall is still obvious, private investment has shrunk sharply, residential land has been in short supply, demand has increased, new houses have become investment products, and the prices of second-hand and degree houses have remained high. What’s the future?

03. Shenzhen Future: Hong Kong, or Singapore?

Shenzhen’s land planning and property market policies determine the city’s industrial structure and urban positioning.

Irish economist Richard Cantillon once pointed out in his famous “Introduction to the Nature of Business”: “Landowners determine the population and market price of a country.”

He found that how the city-state lords who control the land arranged for land production, growing food, growing grapes, or hunting, determined how many people could feed on the land, and determined the price of food on the land.

Shenzhen has a tense human and land conflict, there is a scarce land for development, how much land the government supplies each year, and how to arrange the use of land determines the city’s industrial structure and future prospects; it determines the population that the city can accommodate The number greatly affects the price of real estate; it also indirectly affects whether young people in the city are married late, have no children, how many children they have, and whether they have two children.

The industrial structure of the city can be seen from the land supply structure in Shenzhen:

I. Extremely reduce the land supply of residential land, so as to maintain high housing prices, enlarge financial assets, strengthen the financial market, and finance the real economy and high-tech industries;

2. Ensuring sufficient industrial land (the city’s industrial land should not be less than 30% of construction land), establish an industrial city, promote the transformation and upgrading of industrial structure, and vigorously develop high-tech industries and high-end manufacturing.

Many people ignore