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xue hui, commentator of china business network

on september 9, the shanghai stock exchange and the shenzhen stock exchange issued a notice announcing that due to the adjustment of the constituent stocks of the hang seng composite large cap index, mid cap index, and small cap index, the list of stocks for the hong kong stock connect was updated and will take effect on the next hong kong stock connect trading day. in this adjustment, 33 stocks including alibaba were newly included in the list; at the same time, 33 stocks including powerlong real estate, shimao group, and sino-ocean group were removed.

it is worth noting that in this adjustment, although some real estate-related stocks were removed, some companies such as hang lung group and vanke cloud were included. this reflects the change in the capital market's logic of real estate investment. from the perspective of the removed stocks, they are mainly residential developers operating in a fast turnover mode, while the new additions are more commercial real estate operators and property management service providers.

as the overall scale of residential sales has declined, residential developers with high turnover rates are facing higher risks and are therefore being coldly received by the capital market. in contrast, businesses that used to be on the fringes of the real estate market, such as commercial real estate management, property management, construction services and long-term rental apartments, are now receiving more capital attention.

this change in investment logic can be verified from the actual performance of enterprises. the recently released interim financial reports show that the revenue of a-share and h-share listed real estate companies decreased by 13% year-on-year, and the net profit decreased by 82%. in contrast, in the first half of the year, the total revenue of 62 listed property management companies reached 145.217 billion yuan, a year-on-year increase of 6.25%; the total net profit was 9.006 billion yuan, a year-on-year decrease of 30.93%. this makes companies like vanke cloud included in important index components.

let's look at the performance of real estate agencies. according to the interim report of beike, its net income in the first half of the year was 39.7 billion yuan, which was basically the same as 39.8 billion yuan in the same period last year. this reveals a phenomenon: although the total volume of the new home market has decreased, the scale of the broad real estate market, including new homes, second-hand homes, home decoration and rentals, has not declined significantly. therefore, the status of the entire industry should not be evaluated solely based on the plight of developers.

in fact, the logic of the real estate industry is changing. the sharp contraction of residential development business is partly due to the fact that many developers have turned to construction agency services. as developers actively reduce their debt levels, more land purchased by urban investment companies has appeared in the land auction market, but due to the lack of development capabilities of these companies, these projects are often entrusted to professional construction agencies. this has led to the rise of the construction agency market. according to data from the china index academy, in the first half of this year, the newly planned construction area of ​​real estate construction agencies increased by 3.0% year-on-year.

commercial real estate is also quietly changing. under the current circumstances, reits have become a new financing channel. many commercial real estate companies have successfully issued reits products, and companies with a large number of commercial real estate assets (such as hang lung group) have also been favored by the market.

the index adjustment not only reflects the change in capital attitude, but also a reassessment of the industry's value. after the adjustment in recent years, the real estate industry has not declined, but has developed in a diversified direction. although residential developers still need to work hard to survive, industries such as property management, construction agency, commercial real estate management and real estate agency have found new ways to survive and are expected to achieve better development.

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