As Beijing’s real estate market enters a downturn, the premium rate for subsequent re-entry restricted-use housing plots has fallen. Zhang Dawei said that it is expected that the loss of these projects may be reduced, but the competition in the restricted- housing market is still fierce.
Editor’s note: This article comes from Zhongjing Jingwei , author : Xue Yufei, reproduced with permission
In order to stabilize the excessively fast-rising housing prices, limited-competitive housing that limited the highest selling price of commercial housing came into being, and has quickly become the mainstream of supply in the new housing market in Beijing in the past two years. Due to the slightly lower price, restricted housing is considered a “welfare house” for buyers, but this may not be a good thing for housing companies. Institutional data show that due to factors such as small differences in housing prices and land prices, extended sales cycles, high financing costs and other factors, 80% of the restricted housing projects in Beijing’s market transactions will lose money.
Under the unprofitable situation of enterprises, the quality of delivery of real estate has attracted market attention. In Beijing, even luxury mansion projects that cost 100,000 yuan per square meter and cost over 10 million yuan are not lacking in quality. Rights problems. Industry insiders point out that 2020 and 2021 will be the year of delivery of restricted housing projects, and the issue of housing quality should attract great attention from all sides.
Restricted house prices in some regions fell by 20%
After working in Beijing for many years, in August 2018, Tong Ling (pseudonym) bought a house in the Xuhui City project in Fangshan District with the first payment made, plus some miscellaneous expenses, the average price of the house Close to 39,000 yuan / square meter.
When buying a house, Xuhui City’s real estate consultant told Tong Ling that this is the first batch of restricted housing projects in Beijing that received a pre-sale certificate. The average sales price of the batch of housing approved by the housing construction department was 38,994 yuan / Square meters, the price is right. Tong Ling didn’t quite understand what restricted housing was. Her understanding was that the government helped the people to hold the sale price, and it was more cost-effective to buy such an item.
Limited housing, that is, limited house prices and land auction prices. When the land is bidding, the sales price of future commercial housing is set. When the land auction price reaches the upper limit, the developer holds the proportion of self-holding and the area of the public rental housing. Bid. At the same time, buyers must not trade on the stock market for five years after acquiring project property rights. In other words, the government has set a red line for the highest price of restricted housing projects, which developers must not exceed, but there are no restrictions on floating downwards. This type of dwelling is still a commercial dwelling and does not belong to the guaranteed housing sequence.
With the emergence of the emphasis on controlling effects, the real estate market in Beijing is in a slump, and the price reduction of new and second-hand housing has become a trend, and the Xuhui City project outside the sixth ring road has also been affected. Tong Ling told Zhongxin Jingwei’s client that the price of Xuhui City has dropped by about 5,000 yuan / square meter, and she has lost more than 300,000 yuan. Since obtaining the pre-sale certificate in June 2018, Xuhui City has not been sold out.The lowest selling price of this building is 32,500 yuan / square meter.
Unsatisfactory sales is a problem that most of the limited housing projects in Beijing need to face. Zhang Dawei, chief analyst of Central Plains Real Estate, told Zhongxin Jingwei’s client: “The 128 phases and 78 limited-competitive housing projects that have entered the market have a total of about 58,700 residential units. 42.7%. Except for a few real estate properties, more than half of the restricted housing projects can be considered excellent. “
Statistics of the Central Plains Real Estate Research Center show that, including limited-competitive housing, although the volume of new commercial residential buildings in Beijing rose by 57% year-on-year in 2019, residential supply in 2018 and 2019 exceeded 40,000 for two consecutive years. Sets, the inventory of commercial housing reached 80,000 sets, breaking the highest record in the past 8 years.
The high inventory of new commercial housing is related to the surge in supply of restricted housing. The agency said that since 2018, Beijing has supplied a total of 95,000 new homes, of which 54,400 are limited to competitive housing, accounting for 68% of the market supply. There is also a large backlog of restricted housing projects, with a cumulative inventory of 33,800 units.
The client of Sino-Singapore Jingwei noted that under the double squeeze of poor sales and increased supply, except for a few well-located and mature limited-selling housing projects that sold homes at the highest price limit, the actual sales of most properties There is a certain amount of space between the price and the ceiling price, similar to Xuhui City’s price reduction action, which is not uncommon in other real estate.
“Beijing limited-competitive houses are clearly crowded together, concentrated in Qinglong Lake, Yizhuang, Daxing and other areas. In this case, although most projects have improved their planning, design, and layout, they are subject to the return of funds. There may be a price war in the market. “Zhang Dawei said that the price of restricted housing in some regions has fallen by more than 20%.
Most projects will lose money
The price cut has further squeezed the already small profits of limited housing projects. The Central Plains Real Estate Research Center said that since 2017, Beijing has entered into a total of 103 limited-competitive housing plots. The cost of the land (operating part) and the price difference between the 103 plots are as low as 6300 yuan per square meter and the highest There are only 38 plots of land above 30,000 / sqm, and more than 20,000 / sqm. Including construction, marketing, finance, taxes and other costs, most projects will lose money.
“Of the 66 limited-competitive housing plots that have entered the market (some projects belong to multiple plots), the price and land price difference of 46 plots is within 20,000 yuan / square meter. At present, only 8 of these projects One project was basically sold out, and the other four projects were basically capital-protected. On the whole, 80% of the limited-competitive housing projects entered into the market in Beijing have lost money. Even if they are sold out quickly in the future, they will only reduce losses. Expand, “said the research center.
Kerry Research Center also stated at the end of October 2019 that it conducted statistics on the operation of 86 residential plots in Beijing in 2016 and 2017.The analysis found that out of the 66 projects that have been opened, only 30% of the projects have a surplus, and over 70% of the projects are facing losses. Among the limited-competitive houses, Xicheng Tianzhu, Jinchen Mansion, Yili Wanhe, Xirui Chunqiu, Beijing Lingxiu, Guancheng Villa • The price difference between everyone’s house prices and land is about 17,423 yuan / square meter, 14975 yuan / square meter , 8348 yuan / square meter, 7652 yuan / square meter, 6926 yuan / square meter, 3742 yuan / square meter, these projects will lose money.
Yan Yuejin, research director of the Think Tank Center at E-House Research Institute, analyzes the client of Sino-Singapore Jingwei. Under normal circumstances, the land price accounts for 30% of the house’s selling price, and then the costs of construction, marketing, taxes, and other costs are cut to make the project profitable However, the proportion of land prices in many restricted housing properties in Beijing is too high, which is an important reason for losses.
Zhang Dawei said that there is a small gap between house prices and land prices, and developers already knew when they took the land. The reason why they dared to take land at high prices was because of better expectations of the market’s future. When the earlier batch of limited-rent housing plots were transferred, the market was still hot, and the developers were relatively optimistic, and the underground value of the project was relatively high. At the same time, because the limited-selling housing prices were low, the developers believed that the project would be realized quickly Desalination, financial costs are also low, and profits can be realized. But as the market went down, sales became slower, and the value of underground goods was difficult to sell at high prices, and profits were slowly swallowed up by financing costs.
Chen Xiao, an analyst at the Zhuge Finding Data Research Center, said that compared to unrestricted commercial housing, the price of restricted housing projects is relatively low, and construction costs, financial management costs, marketing costs, various taxes and other expenses are roughly Taking up 30% of the home’s selling price, developers’ profit margins have been squeezed. At the same time, there are disadvantages such as severe homogeneity and relatively remote locations in restricted housing projects, which leads to poor desalination and more difficult profitability.
Housing quality is a hidden concern
People in the industry have pointed out that the quality of the houses delivered in the past two years is generally poor. Try not to buy new houses in these years. As far as Beijing’s real estate market in the past two years, whether it is high-end luxury houses or affordable housing, projects have exposed engineering quality problems.
In September 2018, China Resources Kunlun District, a luxury residential project that broke through the 80,000 yuan / square meter price limit red line and sold at an average price of 95,000 yuan / square meter, fell into quality turmoil, causing considerable concern. Some analysts believe that although CR Land of Kunlun broke the red price limit for Beijing residential properties, compared with the surrounding 120,000 yuan / sqm second-hand housing at that time, the price was still low, the level of profit was not high, and it even fell into a loss. This may be quality. The reason for the discount.
In June 2018, Beijing issued the first batch of pre-sale permits for limited-competitive housing. According to the construction cycle, this year and next year will be the concentrated delivery period for limited-competitive housing projects. Zhang Dawei predicts that the first batch of restricted housing projects to be delivered may appear in March 2020. This year, about 20 projects will be delivered, and 50 to 60 in 2021. In the case that 80% of the restricted housing will lose money, can the quality of the house be guaranteed?
Chen Xiao said that high land pricesLetting the profit margin of housing enterprises be compressed, fast turnover has become their inevitable choice, and fast turnover may bring hidden concerns about housing quality. Yan Yuejin believes that low profits or even losses may not cause housing quality problems, but objectively speaking, some companies do have the urge to cut corners and cut materials, and the possibility of “reduction” exists.
Zhang Dawei said that the company is not profitable, leaving a lot of hidden dangers to the limited housing projects, and the probability of quality problems in future delivery projects has increased. In the period of rising house prices, the sooner buyers buy, the more they may earn, even if there are quality defects, they will not be very concerned. But now it is different. The price of restricted housing has not risen, but has fallen. At this time, if there is a quality problem in the house, buyers will rebound, and small problems will become big contradictions.
Zhang Dawei recommends that when buying a house in the future, proper consideration should be given to projects with a certain space between house prices and land prices, which will reduce the chance of quality problems.
Actually, as Beijing ’s real estate market has entered a downturn, the premium rate for the sale of restricted-use housing plots that have subsequently re-entered the market has fallen. Zhang Dawei said that it is expected that the loss of these projects may be reduced, but the competition in the restricted-use housing market Still tragic.
Before the end of 2019, Beijing has successively sold a lot of unrestricted land. Chen Xiao believes that the transfer of unrestricted land is a fine-tuning of the policy in accordance with the current market development situation. It is a good thing for corporate profits. Yan Yuejin said that the restricted housing will not exit the market for the time being, but it needs further optimization and adjustment.