Many places have released the details of the "stockpiling" of existing houses. How do state-owned enterprises enter the market to collect them? How to use them?
2024-08-15
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Since the beginning of this year, "destocking" has gradually become one of the focuses of real estate policies. At many meetings of the central bank and the Ministry of Housing and Urban-Rural Development, the statement "state-owned enterprises are storing unsold new houses" has been mentioned many times. Industry insiders believe that judging from the solicitation notice issued by Shenzhen this time, this solicitation is carried out for the entire city and has a strong signal significance. As a first-tier city, Shenzhen means that "state-owned enterprises have stepped down" to participate in the "storage" of commercial housing. A new step. So, what impact will the official departure have on the local property market? At present, what progress has been made in the "storage" of commercial housing in the provincial capital of Taiyuan? In the future, what difficulties will there be in the large-scale implementation of this model? Shanxi Evening News reporters conducted an investigation to understand.
A Multiple policies support state-owned enterprises to purchase houses in batches and reduce inventory
Shanxi Evening News reporter learned that Shenzhen Anju Group Co., Ltd. is a state-owned enterprise and an affordable housing agency in Shenzhen. According to its announcement, the scope of solicitation for commercial housing for affordable housing projects in Shenzhen is: residential, apartment, dormitory, etc. of commercial housing nature within the scope of Shenzhen (excluding the Shenzhen-Shantou Special Cooperation Zone), with priority given to unsold buildings or units that can be closed for management. Industry insiders believe that as a first-tier city, Shenzhen's move is of great significance to the entire property market.
Since the beginning of this year, "risk prevention" and "destocking" have become the main tasks in the real estate sector. On April 30, the Political Bureau of the CPC Central Committee proposed "coordinated research on policy measures to digest existing real estate and optimize incremental housing", setting the tone for this round of destocking policies; in the "May 17" new real estate policy, the CPC Central Committee issued a series of policies to determine the specific implementation ideas for destocking, including: setting up 300 billion yuan of affordable housing refinancing, allowing land regulation adjustments, supporting the recovery and acquisition of idle stock residential land that has been transferred, etc.; on June 12, the People's Bank of China held a meeting to promote affordable housing refinancing in Jinan, Shandong Province, supporting local state-owned enterprises to purchase completed stock commercial housing at reasonable prices for affordable housing distribution and leasing; on June 20, the Ministry of Housing and Urban-Rural Development held a meeting to purchase completed stock commercial housing. The video conference on commercial housing used as affordable housing promoted cities and counties to carry out the work of purchasing existing commercial housing for affordable housing in an orderly and effective manner; on July 30, the Political Bureau of the CPC Central Committee held a meeting, which emphasized the active support for the purchase of existing commercial housing for use as affordable housing... Shanxi Evening News reporters noted that as various policies were promoted, various places began to respond actively. Hubei, Guangzhou, Wuhan and other places encouraged the purchase of qualified existing housing sources for use as affordable housing, while some cities such as Guiyang, Huizhou, Lincang, Dali Prefecture and other places issued announcements to collect commercial housing for use as affordable housing, and local state-owned enterprises collected completed but unsold commercial housing for use as affordable housing in some administrative regions. According to statistics from relevant market institutions, more than 30 cities have issued relevant policies. Industry insiders believe that the purchase of existing commercial housing for use as affordable housing is one of the "destocking" methods promoted by current policies.
Shanxi Evening News reporter checked the information released by relevant functional departments and learned that Taiyuan has not publicly issued similar collection and storage announcements. However, the "New Nine Articles" of Taiyuan's real estate market released last year once proposed: Support housing rental companies to adopt market-based purchases of commercial housing or commissioned targeted development to raise affordable rental housing. After signing a purchase agreement, those who meet the conditions can apply for special reward and subsidy funds from relevant departments; after the operation period expires, they can be listed as commercial housing for trading. According to industry insiders, a large part of the affordable rental housing on the surface of provincial cities is currently purchased by rental companies through market-based purchases of commercial housing, and some rental companies also have state-owned enterprise backgrounds. In addition, although Taiyuan has not issued an announcement to publicly collect commercial housing for use as affordable housing, related work is being carried out in an orderly manner. Referring to other cities in Shanxi, for example, Datong's previously issued "Scheme on Accelerating the Resolution of Non-residential Commercial Housing Inventory" clearly proposed "supporting the reconstruction of non-residential stock housing into affordable rental housing", proving that our province has taken action in the "collection and storage" of commercial housing, and policy improvement, implementation, and announcement all require time.
B Used as affordable housing commercial housing "storage" to achieve multiple goals at one stroke
The so-called "stockpiling" of commercial housing refers to the purchase of existing commercial housing for use as affordable housing, while "state-owned enterprises" means that local governments organize local state-owned enterprises to buy houses from developers. Industry insiders believe that such a "destocking" method will help ease the operating pressure of real estate companies and stabilize market expectations.
According to many previous policies, the target of this "state-owned enterprise" acquisition of existing housing is very clear: commercial housing that has been built but not sold by real estate companies, that is, a large number of new houses on the market. Behind the "state-owned enterprises" is the high inventory pressure and long destocking cycle in real estate markets across the country. Taking Shenzhen, which recently issued an announcement, as an example, according to data from a local authoritative real estate information platform, as of the end of July, the number of first-hand residential units available for sale in Shenzhen was 48,974. As of the first half of 2024, the city's new housing inventory area was 5.16 million square meters, and the destocking cycle was as high as 24.8 months. According to data released by the National Bureau of Statistics, from January to June this year, the sales area of newly built commercial housing was 479.16 million square meters, a year-on-year decrease of 19.0%, of which the sales area of residential housing decreased by 21.9%. The sales of newly built commercial housing was 471.33 billion yuan, a decrease of 25.0%, of which residential sales decreased by 26.9%. In terms of inventory, at the end of June, the area of commercial housing for sale was 738.94 million square meters, a year-on-year increase of 15.2%. Among them, the area of residential housing for sale increased by 23.5%. According to the previous forecast of S&P, my country's annual commercial housing sales in 2024 are expected to be between 9.5 trillion and 10 trillion, nearly half of the peak of 18 trillion in 2021. New home sales are declining, and inventory is increasing. Destocking is imminent. Industry insiders believe that "state-owned enterprises" digesting the inventory can effectively stimulate real estate consumption.
In addition, judging from the policies that have been announced by various places, they all clearly propose "using as affordable housing". Taking Shenzhen as an example, the notice is clearly "Notice on Solicitation for the Acquisition of Commercial Housing for Use as Affordable Housing", which also proposes "actively building a 'security + market' housing supply system." "Generally speaking, if a new affordable housing project is built, the normal cycle from project site selection, design, construction to delivery takes three to four years." Industry insiders said that if direct acquisition is adopted to directly convert eligible commercial housing into affordable housing, this cycle will be greatly shortened and the needs of the rigid housing group can be met more quickly.
"In the current property market, ensuring delivery remains the focus of all real estate companies. Although there are many supports in terms of policies, finance and other aspects, it is obvious that the sales of newly built commercial housing have slowed down for real estate companies, which will inevitably bring certain financial pressure to some developers." Industry insiders believe that using part of the existing commercial housing as affordable housing can, on the one hand, speed up inventory reduction, and on the other hand, help some real estate companies to recover funds. It will not only help stabilize the commercial housing market, but also help real estate companies resolve the pressure of "ensuring delivery" and even repaying debts. At the same time, it also increases the channels for raising funds for affordable housing, which can be said to kill two birds with one stone.
C. There are many difficulties in purchasing second-hand houses.
Since it is a new channel for raising funds for affordable housing, there are naturally certain requirements for housing sources. Shanxi Evening News reporters found that the requirements in various places are similar, mainly including location, area, supporting facilities, procedures and other aspects.
First, the acquired projects need to ensure legality and compliance, which is a rigid requirement put forward by all cities that have issued announcements, including having obtained a completion acceptance registration certificate, clear and tradable property ownership, and being able to meet the requirements of financial institutions for issuing loans; secondly, the location of the property should be suitable, with convenient transportation and relatively complete supporting facilities; thirdly, the apartment size should be appropriate. For example, Shenzhen requires that the main apartment size should meet the apartment size and area of Shenzhen’s affordable housing (less than 65 square meters). Many places have also set standards according to the two types of allocation and sale. For example, Yantai’s acquisition and storage details propose that the building area converted to affordable rental housing should be within 70 square meters, and the building area converted to affordable housing for sale should be mainly 90 square meters; finally, many places have clearly proposed to give priority to the selection of whole buildings or whole units that have not been sold and can be closed. Yantai, Xinxiang, and Weihai even stipulate that the entire building is the basic acquisition unit.
"The acquired housing sources must be converted into affordable housing in a timely manner, which means that on the one hand, the housing sources must meet the needs of this group of rigid demand groups, such as requirements for apartment type and location, affordable prices, etc. On the other hand, it must also facilitate the acquisition of enterprises in the later stage of operation and management. This means that the acquisition of houses cannot be carried out blindly." Industry insiders said that this is an important reason why "state-owned enterprises" acquire existing housing, mainly for commercial housing that has been built but not sold by real estate companies. This is also reflected in many affordable rental housing projects in the provincial capital. Shanxi Evening News reporters visited and found that the affordable housing in the provincial capital is located in the core area of the region, and most of them are whole buildings or independent units, which are uniformly operated and managed by relevant enterprises.
Previously, many places have introduced the "old for new" policy, and a few cities have also introduced the policy of "state-owned enterprises" purchasing residents' second-hand houses. In this regard, industry insiders said that in the short term, it is unlikely that state-owned enterprises will purchase residents' second-hand houses for use as affordable housing. "Personal second-hand housing sources are too scattered, and there are various uncertainties, which makes it more difficult to reuse them after acquisition." Industry insiders believe that in actual operation, personal second-hand housing sources vary in age, location, quality, etc., and affordable housing requires centralized configuration or sharing of public supporting facilities. It is too difficult to operate personal second-hand housing sources in a centralized manner, and it is difficult to arouse the enthusiasm of enterprises. A reporter from Shanxi Evening News checked several cities that have implemented the policy of "purchasing second-hand houses from individuals". Most of them have limited purchases, and the number of houses purchased is not the main force of affordable housing. For example, in Taicang City, Jiangsu Province, these "old for new" old houses are intended to enrich the supply of talent apartments and affordable housing. Xi'an encourages qualified enterprises, institutions and social entities to rent or purchase relatively concentrated second-hand houses, and after micro-renovation, use them for operations such as staff dormitories, home-style hotels, and homestays to create a diversified housing market. Some cities even let the developers who acquire second-hand houses handle it themselves.
D Price is the key. Reasonable “storage” is effective
Although "state-owned enterprises' participation" in the "storage" of commercial housing is one of the current policy-driven methods of "destocking", it is still in the development stage and some difficulties in actual operation must be paid special attention to.
First of all, in terms of price, according to the "Guiding Opinions on Planning and Construction of Affordable Housing", the allocation rules for affordable housing are: "land cost + construction cost + profit" break-even pricing, that is, the allocation price is calculated and determined based on the principle of basically covering the allocated land cost and construction cost, plus a reasonable profit. The project acquisition details released by most cities clearly mention "taking the replacement price of affordable housing in the same area as the reference upper limit". The so-called "replacement price of affordable housing" refers to the cost required to rebuild a house with the same or similar conditions as the existing housing in a specific area according to current market conditions, usually including the allocated land cost, construction cost and a profit margin of no more than 5%. Industry insiders believe that this calculated price as the acquisition price is often quite different from the local commercial housing price. For example, it was previously reported on the Internet that the pricing of Xi'an's allocation-type affordable housing will be within 50% of the surrounding commercial housing prices. If the housing is acquired at this price, the willingness of real estate developers to sell it may not be high. "Most of the cities that have announced the details of state-owned enterprises' acquisition of houses are third- and fourth-tier cities. Although first-tier cities have a higher demand for affordable housing, most of their inventory levels are not high. Against this background, it may be difficult to require real estate developers to sell a large number of existing houses at a discount." A reporter from Shanxi Evening News interviewed a senior marketing industry insider in the provincial capital, who said that in the current provincial capital's real estate market, most real estate developers put "stability" first, especially the leading real estate developers with good operations. The pace of development has slowed down, the volume of sales is limited, and there is almost no debt pressure brought by high turnover and high leverage. They do not need to sell existing houses at low prices to quickly recover funds. If state-owned enterprises make large-scale acquisitions at too low a price, blind participation will instead result in losses in profits and income.
In addition, the acquired houses should be converted into affordable housing, which means that it is not just about purchasing commercial housing for the purpose of destocking, but rather promoting bulk acquisitions on the premise of meeting the local demand for affordable housing. Industry insiders said that this requires the acquirer to not only understand the local stock of houses to facilitate the screening of suitable houses, but also to find out the size of the group of people who need housing, and to consider how to deal with them while acquiring houses. Reasonable "acquisition and storage" can bring multiple benefits such as destocking, stabilizing the market, and increasing the supply of affordable housing.
Shanxi Evening News reporter Chai Xuhui
