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securities times reporter zhang da

since the beginning of this year, the real estate industry has continued to adjust. under the influence of a series of support policies issued by the central government on may 17, the real estate market has seen positive changes in june and july, and the year-on-year decline in multiple indicators such as commercial housing sales and real estate companies' funds in place has continued to narrow. how to view the future market trend and the progress of real estate companies' transformation to a new development model have become hot issues at recent real estate companies' performance release conferences.

judging from the contents of the semi-annual performance release conferences of many real estate companies, although real estate executives generally believe that the current real estate market is still in the adjustment stage and market confidence needs to be restored, they are still confident in the medium and long-term development of the industry. at the same time, the transformation of real estate companies to new models is accelerating, and the contribution of operating businesses of many real estate companies continues to increase. actively optimizing debt structure to ensure cash flow security has become an important task at present.

confidence in the medium and long term market

in the first half of the year, the real estate market underwent a deep adjustment, the market supply and demand relationship underwent major changes, and the sales performance of real estate companies generally declined to varying degrees. the future trend of the real estate market has attracted much attention.

lin zhaoyuan, chairman and executive director of yuexiu real estate, said that after the "may 17" new policy, the market rebounded in june and the downward space gradually narrowed in july. overall, the market is still in a stalemate of seeking balance. in the second half of the year, with the increase in policy easing and the gradual recovery of market confidence, the real estate market is expected to bottom out and stabilize.

lin zhaoyuan also said that as one of the country's important pillar industries, the overall market size of real estate is expected to maintain a level of 8 trillion to 10 trillion yuan. the overall transaction scale of the cities that yuexiu real estate has entered is more than 200 billion yuan, and the stock market is still developing. "we are full of confidence in the future market."

yu liang, chairman of the board of directors of vanke, also gave a positive assessment of the future development trend of the industry. he believes that in the medium and long term, the potential housing demand has passed the historical peak, but the absolute scale is still huge. in the short term, after three years of market adjustment, the cost-effectiveness of new houses is improving, and the policy support for diversified housing demand is also continuously increasing. these are accumulating energy for the recovery of market demand and providing soil for the arrival of a new development stage.

yu liang further explained that, first of all, with the fundamental changes in the supply and demand relationship of real estate, the key factors of market competition have changed from scale to product strength and service strength. at present, the product strength and service strength of new houses have been greatly improved compared with before. at the same time, after three years of adjustment, housing prices have fallen back to a relatively reasonable level, and the cost performance of new housing products has been greatly improved. in addition, from the policy side, as each city implements its own policies, whether it is the threshold for buying a house, the down payment ratio and the level of mortgage interest rates, including the "90/70" policy and the adjustment of ordinary residential standards, the support for diversified housing needs has made it easier to buy a house. consumer confidence is gradually recovering, the burden of housing expenses has been significantly reduced, and purchasing power is also increasing, which has created good conditions for the recovery of demand. from the supply side, the newly started residential area in the first half of this year fell by 24% year-on-year, which means that the newly started area for the whole year is about 500 million square meters, and the supply of new houses is relatively insufficient. therefore, the improvement of the supply and demand relationship has created conditions for the market to get out of the trough and regain upward momentum.

the pace of transformation and development is accelerating

faced with the profound adjustment of the industry, the model of relying solely on real estate development business has been difficult to sustain growth. real estate companies have accelerated the pace of diversified transformation and actively explored new development models. many real estate companies that have pre-positioned commercial, long-term rental apartments, property and other operating businesses have continued to increase the contribution of operating businesses to performance.

longfor group, which began to adjust and transform in 2022, has made rapid progress. in the first half of this year, longfor achieved contract sales of 51.12 billion yuan and operating income of 46.86 billion yuan. among them, operating income was 13.1 billion yuan, a year-on-year increase of 7.6%, contributing 28% to the group's overall revenue; the gross profit margin of operating business exceeded 50%, and the net profit margin exceeded 25%, and the contribution to the group's profit increased to more than 80%.

chen xuping, chairman and ceo of longfor group, said: "at this rate, we expect that by the end of 2028, the group's operating income will account for more than half. by then, the entire business model can be said to have switched to a new development model."

china resources land has also made substantial progress in its transformation and innovation. in response to questions from securities times reporters at the performance conference, li xin, executive director and chairman of the board of directors of china resources land, said that the real estate industry has fully entered the era of inventory. in terms of development and sales business, the company has gotten rid of the inertial thinking of relying solely on incremental growth to achieve performance, and has shifted its focus to inventory clearance and improved the organizational capabilities of the entire value chain. at the same time, with the continuous promotion of real estate investment trust fund policies, the company's operating real estate and asset management businesses have begun to take shape, and the transformation to large asset management business has become a potential.

"so far, the total asset management scale of china resources land is about 450 billion yuan, and the revenue from operating real estate accounts for more than 25%, and the profit share may be even higher, which shows that china resources land's transformation business is booming." li xin said that china resources land has successfully made the leap from the first residential growth curve to the second commercial growth curve. in the future, it will focus on the ecosystem element business, and make key efforts in three sub-segments such as urban construction, venue operation, and rental housing to comprehensively promote the implementation of the strategic positioning of urban operators.

faced with the difficult period of the real estate industry's clearance and transformation, midea real estate chose a special restructuring plan, separating the development business from the listed platform and building a business model of "development and construction + property management services + asset operation + real estate technology". hao hengle, chairman of the board, executive director and president of midea real estate, said that the real estate development business is currently under pressure, but the business prospects around the real estate industry chain are broad. he believes that the asset operation, real estate technology and other businesses retained by midea real estate after the restructuring have good growth space.

optimizing debt structure is the key

under the current market situation, it is crucial to ensure the security of cash flow. real estate companies have become more cautious in investing in land, and finding ways to reduce debt has become the most urgent task.

"when implementing the transition from the old model to the new one, the most critical thing is to handle the debt issue well." chen xuping said that the characteristics of real estate development are large scale and short cycle, but also great uncertainty. most debts are based on the old model. if the debt structure is not switched, it will be difficult to complete the business transformation.

chen xuping further stated that when switching to a new development model, the priority is to optimize the debt structure, first, to reduce the debt scale, and second, to extend the debt cycle. longfor uses the positive operating cash flow of all businesses to reduce the total debt, that is, to use positive cash flow to reduce the total debt, and at the same time, replace the 3 to 5 year credit bond financing with long-term operating property loans. "only after completing the optimization of the debt structure can it be possible to achieve the transformation of the new model, as well as the transformation of income and profits."

it is reported that longfor has actively and orderly reduced its debt scale since 2023. as of now, longfor has repaid 10.7 billion yuan of domestic public bonds in 2024, and the remaining domestic public bonds due this year are only 1 billion yuan. supply chain abs and commercial bills have all been cleared. by the end of 2026, longfor will have no overseas public bonds due.

in the face of temporary operating difficulties, vanke has also made many efforts in the first half of the year to ensure cash flow and debt repayment. in addition to actively selling, promoting large transactions and asset revitalization, and gradually withdrawing from non-core businesses and investments, vanke's executive vice president and chief financial officer han huihua introduced that in the first half of the year, vanke completed the repayment of 7.3 billion yuan of domestic public bonds and about 10.4 billion yuan of overseas public bonds, and there are still 2 billion yuan of domestic public bonds due in september to be redeemed. in the second half of the year, in addition to creating cash flow on the operating side, vanke will try its best to stabilize the scale of bank stock financing, actively transform financing models, and continue to strive for opportunities such as syndicated loans and operating property loans to provide incremental liquidity to ensure the safe repayment of debts.

greentown china's management said that in the second half of the year and even the first half of next year, the company will still maintain a bottom-line mindset and a cautious and prudent business strategy. this year's investment will be more cautious, and it would rather miss out than make a good investment. the overall investment strength will be slightly weaker than last year. it is reported that all of greentown's overseas loans due in 2024 have been basically replaced in the first half of the year, and the replacement of the remaining debts due in 2025 has also been started and is currently being carried out in an orderly manner as planned.