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tian guobao, a reporter from economic observer on september 5, wang qiang started bidding for a plot of land that he liked, but he had no chance to participate. the land was located in an industrial cluster in a first-tier city and had good demand support. according to the comprehensive judgment of him and his colleagues, it was expected to be sold out within a year, but in the end, the investment in the plot of land did not pass the review of the headquarters.

wang qiang works in the regional investment department of a state-owned real estate company. since the beginning of this year, the headquarters has stepped up its review of investment risks, and his company's actual investment in the first eight months was less than one-third of the annual plan.

the starting price of the plot that wang qiang likes is 49,000 yuan per square meter, and the current second-hand housing prices around the plot are generally less than 50,000 yuan per square meter. the headquarters believes that it is difficult to balance the profits and sales of future projects and does not agree to participate in the auction.

since the beginning of this year, based on the real estate situation, central enterprises and local state-owned enterprises have also begun to acquire land cautiously.

wind data shows that in the first eight months of 2024, the national land transaction amount was 1.42 trillion yuan, a year-on-year decrease of 31%, and only one-third of the same period in 2021.

wang qiang has been working in investment for nearly ten years. starting this year, his company's investment standards have been increased from 8 to 13, and only those who meet all the criteria can make investments.

reduce land acquisition

at the beginning of the year, wang qiang's company planned to invest about 10 billion yuan, but the equity land acquisition amount in the first eight months was less than 3 billion yuan, equivalent to the land acquisition amount in one month in 2023. wang qiang said that it was not that he did not want to acquire land, but that most of the land did not meet the investment requirements.

it is not just wang qiang's company that has reduced its land acquisition.

the interim results for 2024 show that poly development acquired 12 new projects in the first half of the year, with an equity land acquisition amount of 10.9 billion yuan, less than half of the same period in 2023. as of the end of june 2024, poly development's land reserves fell by 8% from the beginning of the year.

poly development will focus its investment on 38 core cities across the country, which account for 70% of its land reserves. the inventory in other cities accounts for less than 30%, mainly distributed in third- and fourth-tier cities in south china and east china with active economies and continuous population inflows.

in the first half of the year, china overseas' total investment was 12.9 billion yuan, less than one-third of the same period in 2023, but it is in a leading position in the real estate industry. zhang zhichao, ceo of china overseas, said that the lack of land supply and insufficient supply of high-quality land in first-tier cities in the first half of the year were the main reasons for the small amount of land acquisition.

since 2021, china overseas has focused on investing in first-tier and strong second-tier cities. in the first half of 2024, first-tier cities accounted for 67% of the investment. in addition to acquiring land in the open market, china overseas is also actively paying attention to investment opportunities in mergers and acquisitions, urban renewal and other fields. in the first half of the year, china overseas acquired an urban renewal project in xi'an from gemdale.

like poly development, greentown china does not rule out acquiring land in economically developed third- and fourth-tier cities. guo jiafeng, ceo of greentown china, said that greentown's investment is mainly in first-tier and core second-tier cities, while it will also consider structural opportunities in high-quality sectors in non-hot cities, especially opportunities in some economically developed cities and counties in the yangtze river delta.

jianfa is one of the real estate companies that has been more aggressive in land acquisition in recent years. according to cric data, in the first eight months of 2024, jianfa acquired land worth 27.9 billion yuan, less than 40% of the land acquisition amount in 2023.

at the performance meeting, the management of jianfa stated that it would carry out land reserve replenishment in an orderly manner based on the sales speed and growth trend. this year, it had increased its layout in the eastern region, especially in provinces such as zhejiang, jiangxi, fujian and jiangsu, in preparation for deep regional development.

jianfa believes that the price of centralized land supply in the first half of 2024 is too high, which will have a great impact on land acquisition. for example, in cities such as hangzhou and fuzhou, although all inventory projects have been sold out, only moderate and small supplements are made in consideration of the maintenance of the team and brand, and the main model is cooperation.

data from the china index academy shows that in the first eight months of this year, the amount of land acquired by the top 100 companies fell by 40% year-on-year. real estate companies, including central state-owned enterprises, have significantly reduced their land acquisitions. economic observer learned that since the beginning of this year, regulatory authorities have required real estate companies to not exceed 40% of their sales to land acquisition ratio.

adjustment strategy

a financial director of a listed real estate company told economic observer that acquiring the wrong piece of land could cause the company to go bankrupt, "which is not an exaggeration at all."

if real estate companies want to develop, they must invest in land, but the current risk of acquiring the wrong land is too high. therefore, adjusting investment strategies and raising investment standards have become one of the main means for most real estate companies to control risks.

china merchants shekou will narrow down its investment scope to 10 cities. wu bin, deputy general manager of china merchants shekou, said that it is necessary to focus on urban areas and invest more than 90% in core cities.

wang qiang said that in the middle of the year, their company's research on the real estate market and the land market concluded that the risk of acquiring land was still relatively high, so they further tightened investment.

the company headquarters where wang qiang works has an investment research team of dozens of people. they conduct comprehensive assessments of the core cities and hot spots in each metropolitan area to determine the key investment areas. they are also responsible for evaluating the planned investment projects reported by urban companies.

the first evaluation indicator is the gross profit margin of the land. any land plot must reach a double-digit gross profit margin. if the gross profit margin does not meet the standard, even if the project can be cleared in half a year, it will not be considered. this is one of the most important red lines.

the second evaluation indicator is the input-output ratio of the project, which combines all potential costs of the project with indicators such as sales cycle and profit margin to set a price red line for each plot of land participating in the auction.

the third is to evaluate the future market trend of the local area. it takes at least four to six months for a project to go from land acquisition to sales. the investment research team needs to make predictions about the market at the time of sales and during the sales cycle. if the sales cycle of a project exceeds two years, in principle, investment will not be considered unless there is huge room for appreciation in the future.

jinmao summarizes its investment strategy into five words: "early", "responsible", "deep", "detailed" and "accurate". "early" means obtaining project information early and letting the investment research team get involved in advance; "responsible" means clear responsibilities, merging the headquarters, regions and cities into one level, and looking at problems from different dimensions; "deep" means taking all problems into consideration to reduce mistakes and deviations; "detailed" means observing every detail of the project; and "accurate" means the result, that is, getting the right land.

as the gross profit margin of land acquisition before 2022 has declined significantly, jinmao is trying to improve the overall gross profit level by acquiring projects with high gross profit margins.

wind direction analysis

different real estate companies have different judgments on the development trend of real estate, and their investment and sales strategies are also different.

as the industry leader, in the second half of the year, poly development will, on the one hand, firmly adhere to the destocking strategy and actively adjust its investment rhythm; on the other hand, it will comprehensively sort out the resources at hand and actively communicate with local governments on aspects such as the adjustment of existing land regulations, the replacement of existing land, and the acquisition and storage of existing houses.

like poly development, destocking is also a core task for china resources land. li xin, chairman of the board of directors of china resources land, explained the idea of ​​destocking.

first, the focus of future work will shift from the inertial thinking of developing sales that rely on incremental growth to destocking and improving full value capabilities.

second, the team has formed a sense of destocking. currently, china resources land's asset management scale is around 450 billion yuan, of which operating real estate accounts for more than 25% of the performance.

china merchants shekou has always paid close attention to the transaction structure of first-hand and second-hand houses. its management believes that the market may be low at first and high later this year. with the continuous efforts of policies, the accumulated demand is expected to be further released. therefore, there are relatively better opportunities in the second half of the year, but it will still be cautious about the future market.

zhu wenkai, general manager of china merchants shekou, said that they are keeping a wait-and-see attitude as to whether the real estate sales amount in 2024 can reach the level of 2023. before the market improves significantly, they still hope that sales can be stabilized, and operating cash flow and cash flow are the key.

zhang zenggen, chairman of jinmao, said that jinmao's strategic direction and its insistence on high-end improvement are highly consistent with national policies and industry realities. in the process of continuous reshuffle in the industry, as long as there is no deviation in the strategic direction and product positioning, risks can be avoided to the greatest extent, and jinmao's control of risks is relatively timely.

compared with large central enterprises, wang qiang's company is very cautious in investing in land, but sells as much as possible. under the condition of meeting the requirements of state-owned assets, it realizes the maximum sales, implements one city one policy at the headquarters level, one project one policy at the city level, and one house one policy at the project level.