Developers are not the most popular gamblers in th

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Real estate gambling: the payer is not the developer, and the investor pays for the loser

Real Estate gambling: the payer is not the developer, and the investor pays for the loser

May 09, 2014

[China paint information]

the most dangerous real estate gambling: investors "pay for excess supply"

every time Yang Lingqiang sends it from Shanghai

"Now for the so-called rigid demand of buying a house in Beijing, many people need to use the savings of a family of three generations as the down payment, and then repay most of their monthly income." Six months before Mao Daqing's internal speech, the brand head of a national real estate enterprise raised concerns about the rapid rise of land prices and house prices in first tier cities in a chat with daily economy (Weibo)

not only Beijing and Shanghai, but also many cities have raised market concerns because the inventory of commercial housing has far exceeded the sales since the first quarter of this year. Throughout the first quarter, with the exception of a few cities, the trading volume of most of the first, second and third tier cities fell sharply, and the voices of local governments to save the market continued

however, except Vanke, most real estate enterprises are still optimistic about the future market. According to the first quarter report data of several real estate enterprises, the funds they spent on purchasing goods and services increased significantly compared with the previous year. Statistics from Kerui further showed that, except for April, the activity of developers in the land market in the whole first quarter was still better than that in the same period last year

on the one hand, the inventory of commercial housing far exceeds the demand, on the other hand, enterprises are still increasing the expenditure on land acquisition. Behind the seemingly contradictory phenomenon, there is a reasonable logic. An insider believes that this is a gamble. Many developers know that the probability of house prices continuing to rise is very small, but they all have a fluke mentality: if they win, they can make a lot of money. Moreover, the "payers" of gambling are not the bosses of developers, but various financial institutions that are providing "ammunition" for them to buy land

meeting needs "said Zhang Ping, director of the R & D department. The expenditure on land development and purchase of specially designed fixtures or tooling to meet special experimental standards still increased/

although the data of Kerui and other institutions showed that in the first quarter of this year, the real estate sales area and sales amount in most cities across the country showed a significant" double decline ", but many real estate developers did not suffer from the decline in sales and sales area, And reduce the capital expenditure on land purchase and project development. Taking Gemdale group as an example, the company's sales area in the first quarter was 577000 square meters and the amount was 7.71 billion yuan, with a year-on-year decrease of 11.8% and 10.8% respectively. Its consolidated cash flow statement showed that the cash expenditure for purchasing goods and receiving labor services in the first quarter was as high as 10.429 billion yuan, compared with 4.576 billion yuan in the same period of the previous year

in general, the expenditure of real estate enterprises on purchasing goods and receiving labor services is mostly used for land purchase, engineering construction, etc. Therefore, the above data of the cash flow statement is usually an important reference index to observe the judgment of enterprises on the market

in fact, Jindi is not the only real estate enterprise to increase operating expenses when both sales area and sales amount have declined. Poly Real estate, which also experienced a decline in sales area and sales amount in the first quarter, also increased by about 2.5 billion yuan in cash expenditure for purchasing goods and receiving labor services in the first quarter, and the company's new construction area in the first quarter increased by 32.12%. The construction area of the new land reserve was more than 1.5 million square meters more than the sales area signed in the current period. Another enterprise in "Zhaobao Wanjin" invested in real estate, and the cash expenditure for purchasing goods and receiving labor services in the first quarter even more than doubled compared with the same period last year

among the above accounting items in the cash flow statement, the largest expenditure is Taihe Group, which expanded the most aggressively last year. The company's expenditure in the first quarter of this year increased by 342.82%

among the leading enterprises, only Vanke's expenditure has decreased. The capital outflow of the above accounting items reached 32.088 billion yuan in the same period last year, while this year's figure was only 24.9 billion yuan

Meng Yin, general manager of Kerui information group research center, said that in fact, in the first quarter of this year, various real estate enterprises still spent a lot of money on land in the land market, and the enthusiasm of the land market did not officially fade until April this year. According to information from the National Bureau of statistics, the land acquisition area of real estate development enterprises fell by only 2.3% year-on-year, with the sales area of commercial housing falling by 5.7%

gamble: house prices will still rise/

when explaining the reasons for the company's high land price in the first quarter, the brand manager of a real estate enterprise quoted the chairman of the company at the performance conference as saying, "if the national GDP growth rate can reach 7% and 8% this year, then the house price rise in Beijing is expected to be at least 10%." Obviously, the company is still very confident in the prospects of the market

Shen Linan, assistant to the president of Taihe Group, said when explaining the reasons for the company's large-scale land acquisition in Beijing in the first quarter that the supply of Beijing's real estate market was still insufficient relative to the potential demand of the market. In this context, the Beijing market will still have good opportunities

Meng Yin also believes that at present, in Beijing, Shanghai and other cities, the supply is by no means far exceeding the demand, and the main reason for the current high inventory is the shrinking demand. There are two reasons for the rapid contraction of demand: first, the interest rate of housing mortgage loans continues to rise, which makes some purchase demand unbearable because of rising interest rates; Another reason is that the market is generally bearish on house prices. Buyers delayed entering the market because of lack of confidence. Meng Yin believes that the second factor is the main reason for the sluggish sales in the first quarter

in the past decade, many times of macro-control of the real estate market have caused the market to slump rapidly in a short time. But with the passage of time, the market's view has changed, and the trading volume can rebound rapidly

developers have obviously noticed this phenomenon. The daily economy found that in the first quarter, real estate developers generally increased their companies' ability to withstand the cold through additional borrowing

Xue Jingwen, partner of Ruixin Zhicheng management consulting company, said that various types of funds, including insurance funds and underground private placement, are flowing into real estate, which enables developers to ensure sufficient funds in the case of poor sales

risk of investors: pay for the losers/

with the previous rising house prices, the risk of developers is increasing. "The developers see this very clearly. The reason why they dare to do this is that they have already transferred their profits out of the real estate industry due to the advantages of small restrictions on the structural design of parts. It is not the developer's boss who ultimately bears the risk." Xue Jiong said

if it's not the developers themselves, who will "pay" for the oversupply in the market and the decline in house prices? The answer is very clear, the financial capital that is continuously sending funds to the real estate industry

among them, the most risky may be those real estate private placements and trust loans that promise too high return expectations. Plus the issuance cost, the average borrowing and financing cost of real estate private placement and trust was once as high as 15% or more

the high return on investment makes these financing instruments accustomed to looking for new investment opportunities in high-risk areas of the real estate industry. The reason why these fields can achieve such a high rate of return is usually because banks and other departments with higher requirements for risk control are unwilling to lend money to real estate enterprises

James Morrison, senior executive director of Hans Group Asia Pacific, admitted that it is difficult to achieve high returns of some domestic private equity funds before testing basic sensory and physical and chemical indicators. Of course, it does not rule out that some foundations use higher investment leverage to achieve the promised return. But usually, this will bring greater risks to investors

in Xue Jingwen's eyes, the probability of pursuing high return real estate private placement or trust "paying the bill" for high-risk real estate development investment behavior is increasing. In fact, there have been trusts that had to choose rigid cashing because of the overdue default of trust loan projects

however, there are still many opportunities for the real estate industry that has encountered the pressure of unsalable inventory. As Yu Liang, President of Vanke, said when publicly supporting Mao Daqing, "the refinement of real estate has just begun". Whether residential customers, or customers of consumer real estate and industrial real estate, their needs will be different from before. The original stock of real estate is difficult to meet their needs. Whether it is demolition and reconstruction, or functional transformation, it will bring opportunities. It's just that customers' needs will be more and more refined, not just that the area will be larger and larger

enterprises that can grasp these opportunities will become leaders in the industry, and the business advantages they have are still considered to be the top secret of the enterprise. Through the clues provided by the Organizing Committee of the 2014 value real estate general evaluation list, the daily economy learned that industry leaders do not have to worry about the secret of high inventory. In the next two to three months, the daily economy will gradually disclose these secrets to help investors find star enterprises that can still have good sales performance without reducing prices in the context of overcapacity in real estate

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