2024-08-08
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Reporter of China Business Network: Zhen Sujing Editor of China Business Network: Chen Mengyu
On August 7, the “Shen’anju” WeChat official account released a solicitation notice for the acquisition of commercial housing for use as affordable housing.
The notice stated that in order to actively build a "security + market" housing supply system and follow the principles of "marketization, rule of law" and voluntary participation by both parties, companies affiliated to Shenzhen Anju Group Co., Ltd. plan to purchase commercial housing for use as affordable housing. Now, projects for commercial housing to be used as affordable housing are being collected in Shenzhen.
This is the second first-tier city to start the "purchase instead of construction" model. On May 30, the Zengcheng government of Guangzhou announced that it would publicly solicit applications for eligible commercial resettlement housing sources for the Guangzhou (Xintang) to Shanwei Railway Project (Xintang Section), that is, solicit eligible residential housing sources (real estate companies) from the society, and then select resettlement housing sources according to relevant procedures.
Industry insiders believe that the standards for Shenzhen's acquisition of inventory housing are similar to those of other cities, which can be summarized as building integrity, advantageous location, apartment types that match the requirements of affordable housing, complete supporting facilities, and compliance with property certificates. This means that first-tier cities have already started the "purchase instead of construction" model, and it is expected that Beijing and Shanghai will follow suit.
The notice pointed out that the scope of solicitation includes commercial housing, apartments, dormitories, etc. within the scope of Shenzhen City (excluding the Shenzhen-Shantou Special Cooperation Zone), and priority will be given to building projects (housing sources) that are unsold entire buildings or entire units and can be closed for management.
The conditions for the housing source include suitable location, convenient transportation, relatively complete supporting facilities, close to the core area of regional development, and possessing industrial foundation and development advantages; suitable apartment size, in principle, the main apartment size of the project (housing source) should meet the requirements of Shenzhen's affordable housing types and areas (below 65 square meters); convenient living, convenient surrounding transportation, close to subway entrances and bus stops, and relatively complete infrastructure and living facilities and other livable conditions; complete procedures, the proposed acquisition project must have all four certificates to ensure the legality and compliance of the project and meet the loan requirements of financial institutions.
The solicitation period is from the date of publication of the notice to October 31, 2024.
The reason behind the official stockpiling is the high inventory pressure and long sales cycle in Shenzhen's new home market, as well as the lower-than-expected transaction activity.
Data from the Shenzhen Real Estate Information Platform shows that as of the end of July, the number of first-hand residential units available for sale in Shenzhen was 48,974. According to Leyoujia data, as of the first half of 2024, the city's new home inventory area is 5.16 million square meters, with a sales cycle of 24.8 months.
Li Yujia, chief researcher of the Guangdong Housing Policy Research Center, said in an interview with the "Daily Economic News" reporter that more than 100 cities across the country have responded to the country's policies on revitalizing existing stocks and optimizing incremental stocks, which is a reflection of top-down implementation.
However, he also pointed out the challenges that may be faced in the implementation of the policy. First, there may not be enough affordable housing that meets the government's acquisition standards. Most new houses are large-sized units, and small-sized units are scattered and not in a building. Second, the purchase price proposed by the government is relatively low, which may affect developers' willingness to sell.
Li Yujia mentioned that the acquisition price is a key issue, which may be lower than 50% of the price of commercial housing in the same area. Such a price may be an attraction for developers with tight capital chain and pressure to deliver buildings. But at the same time, only those projects that meet the government's regulations on the construction of affordable housing and have advantages in area, supporting facilities and location can be acquired at a lower price.
Yan Yuejin, deputy director of Shanghai E-House Real Estate Research Institute, said that Shenzhen has started the "buy instead of build" model, while Guangzhou's previous practice was somewhat special because it was "buy instead of build" under a specific project. However, Shenzhen is carrying out the whole city, which has a stronger demonstration effect and more signal significance. Shenzhen's operation also means that first-tier cities have started the "buy instead of build" model, and it is expected that Beijing and Shanghai will follow suit.
Yan Yuejin believes that first-tier cities have greater advantages in carrying out such work because the market for affordable housing has a strong absorption capacity. In addition, first-tier cities also have good financial conditions. If they actively strive for 300 billion yuan of "purchase instead of construction" funds in the future, the pace of such acquisitions will accelerate.
Zhang Dawei, chief analyst of Centaline Property, said that the main reason why people are very concerned about the policy of the national team's acquisition of houses is that it can directly change the current market supply and demand structure. The biggest problem in the current real estate market is the inventory problem. If you want to reduce the inventory, you either rely on individual purchases or institutional purchases.
"Nowadays, many policies have been introduced to promote individual home purchases, but the overall effect is not entirely optimistic." Zhang Dawei emphasized that the government has promoted direct acquisitions of existing housing for use as affordable housing. The policy itself can be said to have solved some of the current market problems very well.
"But the biggest difficulty with this policy is actually the source of funds, which determines how big the impact will be." Zhang Dawei analyzed that, judging from Shenzhen's acquisition conditions, the main apartment type is required to be less than 65 square meters, which may be difficult to match in Shenzhen, so the actual impact of this policy should not be great.
Li Yujia expressed the same view, saying that the policy has limited impact on housing prices due to the small number of eligible projects and the low willingness of developers to sell. He also stressed that the premise of the acquisition policy is to ensure the balance of funds to ensure the sustainability and effectiveness of the policy.
Daily Economic News
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