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Zhuhai state-owned enterprises have also joined the stockpiling camp in a big way.

This weekend, China Resources Land Development (600325.SH) announced that it plans to engage in trading of existing commercial housing and supporting parking spaces with its controlling shareholder China Resources Land Group or its subsidiaries, with the total transaction amount not exceeding RMB 12 billion.

Among them, Huafa Group is a local state-owned enterprise in Zhuhai. Zhuhai State-owned Assets Supervision and Administration Commission holds 93.51% of the company's shares, and Guangdong Provincial Department of Finance holds another 6.49% of the shares.

Huafa Group stated that this transaction was intended to actively respond to the work arrangements of the Third Plenary Session of the 20th CPC Central Committee on "accelerating the establishment of a housing system that promotes both rental and purchase, and accelerating the construction of a new model of real estate development", helping Zhuhai to accelerate the structural reform of the housing rental supply side, effectively increase the supply of affordable, talent and commercial rental housing, build a new housing system that promotes both rental and purchase, and improve the "market + security" housing supply system.

According to the announcement, the transaction methods between the two parties include but are not limited to the direct sale of commercial housing and the sale of equity in real estate project companies; the transaction price will be determined based on the asset appraisal report issued by an asset appraisal company with relevant qualifications, and the final transaction price will be determined and a formal contract will be signed.

Prior to this, Huafa Group had already started trial work on storage with Huafa Group.

On August 1, Huafa Group announced that it would transfer the existing real estate under the name of Huaben Company to Zhuhai Anju Group by transferring 100% equity of its wholly-owned subsidiary Zhuhai Huaben, with a transaction price of approximately RMB 265.5629 million. Among them, Huafa Group holds 100% equity of Zhuhai Anju Group and is an affiliated company of Huafa Group.

The main business of Huaben Company is to carry out the acquisition of old houses for new ones. So far, Huaben Company has established 75 wholly-owned subsidiaries and acquired a total of 79 residential properties. The determination of the transaction price is based on the "Asset Appraisal Report" issued by Guangdong Caixing on the transaction target.

Earlier than Zhuhai, Shenzhen state-owned enterprises also officially announced the launch of the "purchase instead of construction" work to increase investment in affordable housing. On August 7, Shenzhen Anju Group 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, its affiliated companies plan to purchase commercial housing for use as affordable housing.

Public information shows that Shenzhen Anju Group is a wholly state-owned enterprise and an affordable housing specialized institution in Shenzhen. As of the end of 2023, it has planned and built 282,000 affordable housing units and supplied 122,000 units, accounting for about 1/3 of the total number in Shenzhen during the same period.

Since May this year, there have been signs that local state-owned assets have accelerated the work of purchasing and storing commercial housing.

The National Conference on Ensuring Housing Delivery held on May 17th reiterated that in cities with large inventories of commercial housing, the government can place orders and purchase some commercial housing at reasonable prices for use as affordable housing.

After that, many places introduced policies to encourage state-owned enterprises to purchase and store unsold new houses. According to statistics from third-party rating agency YY Rating, as of now, after the "517" new policy, more than 30 cities across the country have begun to implement the policy of purchasing and storing inventory houses, including Zengcheng, Guangzhou, Suzhou, Wuhan East Lake High-tech Zone, Chongqing, Huizhou, Foshan, Kunming, etc. Some cities have also clarified the scope, conditions and prices of housing collection.

The Politburo meeting on July 30 this year once again proposed to actively support the purchase of existing commercial housing for use as affordable housing.

CRIC pointed out that this is the first time that the Politburo meeting mentioned supporting the acquisition of existing commercial housing for use as affordable housing, and this proposal has a prerequisite, namely "insisting on combining digestion of existing stock with optimization of incremental housing". The Politburo meeting on April 30 this year mentioned for the first time "comprehensively studying policy measures for digestion of existing real estate and optimization of incremental housing". From "comprehensively studying" to "actively supporting", it also means that digestion of existing stock will usher in a substantial implementation stage in the second half of the year.

Xu Yuejin, deputy director of research at China Index Academy, also believes that destocking has become one of the focuses of recent real estate policies, and that "state-owned enterprises purchasing and storing unsold new homes" is a measure that is driven by the main policy and has the most direct effect on destocking.

The policy of purchasing and storing is conducive to digesting the existing stock and accelerating the construction of affordable housing. However, a research report by Guotai Junan Securities pointed out that in terms of actual implementation, it is also necessary to comprehensively consider the impact of factors such as funding pressure, market supply and demand on the scale and progress of implementation.

In fact, although many cities have introduced relevant policies, most of them are in the planning stage and there are few specific implementations.

YY Ratings believes that local land purchase and storage is affected by funds, income and management, and it is difficult to expand. At present, the factors affecting the progress of local land purchase and storage include the following three points: first, there is an oversupply of commercial housing and the inventory turnover cycle is too long; second, the demand for housing is relatively sustained and the net inflow of permanent residents is positive; third, local debt and fiscal conditions will also affect the progress of local land purchase and storage.

Cities with faster progress in real estate purchase and storage have three characteristics: they are mainly new first-tier cities and some provincial capitals, have a high turnover cycle for real estate inventory, and have a continuous net inflow of population, including Zhengzhou, Chongqing, Qingdao, Tianjin, Fuzhou, and Jinan. Overall, the progress is relatively slow.

Xu Yuejin believes that the promotion of state-owned enterprises' acquisition and storage may face certain challenges, including acquisition and storage prices, supply and demand mismatch, etc. For example, in some cities where real estate developers have great inventory pressure and a strong willingness to sell, the demand for affordable housing is relatively limited, and the scale of acquisition and storage by state-owned enterprises may be relatively small; and in some cities where the demand for affordable housing is relatively strong (first-tier and core second-tier cities), the market inventory level may not be high, and real estate developers are relatively less willing to sell existing housing at a discount.

According to the purchase and storage standards issued by various places, the purchase price is usually set at 60%-80% of the market price, or based on the land cost + construction cost plus a certain percentage (5%) of profit. In addition, the purchase and storage of houses in various places are mostly required to be located in the central urban area, with convenient transportation and complete infrastructure; they prefer to purchase the whole building or the whole unit, and the building area of ​​the house does not exceed 70-144 square meters (most cities require less than 120 square meters).

Xu Yuejin believes that the current policy direction of "promoting demand + destocking" has been clarified, and the new real estate development model that combines digesting inventory and optimizing increments will not change. The relevant policies of "destocking" are conducive to easing the financial pressure of enterprises, and also help to restore market sentiment and increase the supply of affordable housing. However, issues such as purchase and storage prices and mismatch between supply and demand may affect the pace of policy promotion, and relevant policies still need to be further improved in the future. If all measures are implemented in the second half of the year, it will play a positive role in destocking and stabilizing the market, and will help to accelerate the stabilization and recovery of the real estate market.