Since the beginning of this year, in the face of the outbreak of the epidemic, most housing companies have adjusted their investment quotas for the whole year, but they have only been heavily deployed in the Yangtze River Delta, even exceeding the Guangdong-Hong Kong-Macao Greater Bay Area.
Editor’s note: This article is from Economic Observer , Author: Chen Bo, reprinted with permission
“Growth is the original driving force of all housing companies. Even if affected by the epidemic, most housing companies still have growth requirements, but they have fallen somewhat from the investment target at the beginning of the year.” A TOP20 housing company operator mentioned.
Behind these remarks, the land market ushered in a warming cycle again after a quarter of slowness. According to data from the Central Plains Real Estate Research Center, as of May 25, 50 big cities sold land for a total of 1.6 trillion yuan this year, up 12% year-on-year. The total land transfer in Beijing, Hangzhou and Shanghai exceeded 100 billion yuan.
The Yangtze River Delta is the “protagonist” of this round of the local auction market. As of May 25th, among the top ten cities in the country in terms of land sales, the Yangtze River Delta city occupied 5 seats.
As in previous years, most housing companies are focusing on the “horse race” in the Yangtze River Delta. But a different performance is that since this year, in the face of the outbreak of the epidemic, most housing companies have adjusted their annual investment quotas, but the only heavy deployment in the Yangtze River Delta has even exceeded the Guangdong-Hong Kong-Macao Greater Bay Area.
The most intuitive reason is closely related to the number of listed land in the two regions. “Housing companies choose to add positions at this time, which is a counter-cyclical operation. In the first quarter, the supply of land in Guangdong, Hong Kong and Macao Bay Area was not large, and the overall supply was not as good as cities in the Yangtze River Delta region.” Dean and Chief Strategy of Jiazhao Group Strategic Research Institute Official Liu Ce.
But the more important reason is that the current situation of first-hand housing prices inversion in many cities in the Yangtze River Delta has prompted the new market in this region to be de-sold faster than other regions, and the speed of cash recovery has also accelerated. Under the epidemic, housing companies generally face the challenge of sales targets. The Yangtze River Delta is undoubtedly a “security barrier” in a special battle.
An investment executive of a foreign-funded listed housing enterprise group said that the Yangtze River Delta has played a role in consolidating the basic market in the overall sales of many housing companies. “If a housing company, the performance of the Yangtze River Delta can reach 30% -50%, then the operation of this company is relatively stable. Even if the profit margin is low, there will be no major problems with cash flow.”
the market recovery “darling”
In just two days, Country Garden has been connected to three cities in the Yangtze River Delta region.
On May 27, a commercial and residential plot with a starting price of 291 million yuan in Yancheng City, Jiangsu Province, after 846 rounds of bidding, was received by Yancheng Country Garden Real Estate Development Co., Ltd. under Country Garden for 655 million yuan In, equivalent to floor price 3776 yuan / square meter, the premium rate is as high as 125%.
On the same day, a commercial and residential land was offered at Tupai Market, Nantong City, Jiangsu Province, with a starting price of 434 million yuan. Before the auction began, the plot had been quoted in 19 rounds. In the end, after a total of 228 rounds of quotations for nearly 3 hours, Nantong Country Garden Real Estate Development Co., Ltd. won it with 659 million yuan, with a floor price of 10285 yuan per square meter and a premium rate of 52%.
The day before, Cixi Taiyue Real Estate Co., Ltd., a subsidiary of Country Garden, also obtained a commercial and residential site in Pingyang, Wenzhou, with a floor price of 2663 yuan, after 20 rounds of bidding based on an upper limit price of about 171 million yuan Per square meter, the premium rate is 29.62%.
Three intense soil auctions showcased Country Garden ’s passion for the land in the Yangtze River Delta. Under the epidemic, due to the impact of repayment and debt repayment, some housing companies have previously reduced their annual investment quotas. However, since April, with a wave of recovery, the Yangtze River Delta is still a “heavy position” in the eyes of most housing companies. The best choice.
According to the statistics of China Index Research Institute, in the first four months of this year, the TOP10 housing companies in the Yangtze River Delta totaled 122.2 billion yuan, far exceeding the Bohai Rim, the Pearl River Delta, and the three central and western regions.
Represented by Country Garden, Vanke, etc., the leading housing companies with both scale and strength, although the base camp is focused on the South China region, have been active in various land competitions in the Yangtze River Delta in recent years. Their latest performance is that their willingness to bet on the Yangtze River Delta even exceeds the Guangdong-Hong Kong-Macao Greater Bay Area.
Taking China Merchants Shekou as an example, the data provided by China Index Research Institute showed that from January to April, China Merchants Shekou spent a total of 11.4 billion yuan, and the land area in the Yangtze River Delta reached 670,000 square meters. This amount is equivalent to the same period. 59.4% of the total land. In April alone, China Merchants Shekou won four parcels in the Yangtze River Delta.
In reply to the Economic Observer, China Merchants Shekou pointed out that the company’s investment development is more rational. New projects mainly follow the principle of one city, one policy, and accurate land acquisition, focusing on expected returns. Recently, the land supply in East China has recovered relatively quickly, and the progress of land acquisition is also related to the rhythm of regional land supply.
In fact, the Yangtze River Delta is one of the strategic deep-cultivation areas, and China Merchants Shekou has been focusing on follow-up for a long time. In 2019, China Merchants Shekou subdivided its investment strategy from five major regions into nine major regions. The area where the Yangtze River Delta is located has thus split into the East China and Jiangnan regions. This change was made on the one hand to fully authorize, adapt powers and responsibilities to regional development, and activate the vitality of the front-line theater; on the other hand, based on the consideration of management boundaries, solidify the region and strengthen the city to achieve regional refinement layout.
Of the 79 newly added projects in China Merchants Shekou last year, there are 31 projects located in the East China and Jiangnan regions, accounting for 39% of the total; while only 11 new projects are located in the Shenzhen and South China regions.
except