Central Enterprises To Protect The Profit Channel Of The House: Bundling Business Projects To Acquire Credit

For central enterprises, large-scale participation in construction Affordable housing Is it a hot potato or a new opportunity?

At the beginning of May, the SASAC issued a notice on the website asking the central enterprises to take an active part in the development and construction of the affordable housing. "The central government has promised to build 10 million affordable housing this year, which is very difficult." A person close to the Ministry of housing told Caixin "new century" reporter that the task of ensuring housing construction was too fierce and too big this year, and the situation of start-up and funding was not optimistic.

After a period of exploration and exploration, we have been entangled in responsibilities. profit The central enterprises have also made subtle changes in their attitude towards affordable housing. Under the "big stick" of the affordable housing, the banks relaxed too. Money This is a great temptation to the central enterprises, which can be leveraged to protect the housing loan and can develop other types of commercial projects. The SASAC has pointed out the direction in the document issued to the central enterprises. "We must seize the opportunity to introduce preferential policies in all aspects such as land supply, investment subsidies, financial discount, financing, taxation and other aspects, and combine the affordable housing with commercial real estate development."

Temptation is more than that. For central enterprises, after housing reform, old reform, demolition and resettlement, housing construction and other types of housing are included in the scope of affordable housing, it may bring a new round of resource allocation and adjustment opportunities. Every central enterprise and state-owned enterprise almost sit on the land resources of many industrial, warehousing or scientific research sites. Once these self owned land has been "revitalize" into residential land, the effect will be immeasurable, even if only 1/10 will eventually become commercial residential land. However, there will be a series of complex problems, such as management process, investment risk and distribution mechanism.

Leveraged housing loan

Tian Jingqi, general manager of Minmetals Real Estate Co., Ltd., confirmed to Caixin "new century" that as early as March, the State Council held a meeting to discuss the protection of housing construction, and the relevant ministries and commissions such as the Ministry of housing, the Ministry of land, the SASAC, the Ministry of Finance and many large central enterprises were all present. Subsequently, the Ministry of housing and the SASAC also convened a meeting of the central enterprises of the real estate industry, calling on the central enterprises to take an active part in ensuring the housing construction.

At the end of March, some central enterprises received the document entitled "notice on active participation in the development and construction of affordable housing" (hereinafter referred to as "notice"). The notice requires that the central enterprises should strengthen communication with local governments, strive for support, and participate in the development and construction of affordable housing through various channels in accordance with the market-oriented operation mode under the leadership of local governments.

"The construction of large scale affordable housing is inseparable from the central enterprises. This is both a social responsibility and a political task." A central business person who does not want to be named said that most of the projects currently under construction were mainly central enterprises and state-owned enterprises.

After a period of exploration and exploration, central enterprises found more opportunities from affordable housing. For example, the concept of "affordable housing" expansion, housing reform, old change, demolition and resettlement, housing units and other types of housing units have been included in the scope of affordable housing, some central enterprises were keen to find new ways.

Most of the "shed reform" and "old change" projects are essentially commercial development. Now, with the concept of affordable housing, packaging and projects can be supported by preferential policies. Chen Baocun, Deputy Secretary General of the National Association of real estate managers, told Caixin "new century" reporter that this phenomenon is very common throughout the country. Because of the sluggish sales in the commercial housing market, some developers are reluctant to invest large amounts of money in the old renovation and shed reform projects. In such projects, the central enterprises are also more bargaining power because of the resource advantages of [2642.11 -2.50%].

According to people familiar with the matter, Poly Real Estate [9.87 -2.08% shares. After receiving the notice at the end of March, it sent a letter to 19 cities to apply for participating in the construction of affordable housing. At present, there are 10 cities in the negotiation stage, most of which are old city renovation projects.

Take Shijiazhuang as an example, Baoli real estate has finalized the transformation project of Shijiazhuang Jinshi stone (formerly Shijiazhuang chemical fertilizer plant) in April, and the scale of land is more than 800 mu. Among them, in addition to the construction of Jinhua home security housing project, there are about 3/4 of the plots may be used for commercial housing project development. "If the housing projects are approved, it is easier to win credit support. The 1/4 proportion of affordable housing credit can be leveraged through the phased rolling development mode. The person familiar with the matter said.

In fact, the notice issued by the SASAC to the central enterprises is also clear: "real estate development enterprises should seize the opportunity to introduce preferential policies in all aspects of affordable housing land supply, investment subsidies, financial discount, financing, taxes and other aspects, and combine the affordable housing with the commercial real estate development."

In this regard, Tian Jingqi said that the credit policy for the protection of housing tilt, the central enterprises have enough temptation, "under the background of credit crunch, who can leverage bank loans, who can live better. In the final analysis, real estate is a game of capital and land.

China [3.93 -2.24% shares in China's annual report also clearly defined the real estate development plan, so as to promote the development of commercial real estate, commercial housing and land, and explore new development mode and increase the rate of return on investment.

"Central metallurgical enterprises such as China Metallurgical and China Communications can also play a big role in protecting housing, because relocation and resettlement are also included in the concept of protection, which is conducive to their primary development business." Insiders of the China real estate group told Caixin "new century" reporter that this helps to complete the digital indicators of affordable housing, and is conducive to the negotiation between enterprises and local governments. Moreover, the cost of demolition and resettlement can be included in the overall cost of land development, and be reclaimed when land is sold, so as to ensure investment returns.

A more covert path is the replacement of land resources. According to the analysis of a central enterprise, according to the current situation, the local government has determined that there is no adequate financial support. If we want to complete the construction of affordable housing, no matter what form it is, we still can not jump out of the way of "affordable housing and commercial housing land bundling".

"In the past, commercial housing land was allocated to build 5% to 15% affordable housing, which may later be subsidized by the construction of commercial housing and subsidized by the profit of commercial housing to 3% of the affordable housing." The above said, or the "land care housing" mode of operation, that is, commissioned developers to build affordable housing projects, directional low-cost to sell certain commercial housing land, used for the transfer of affordable housing repurchase.

A central business real estate executive who did not want to be named has also confirmed to Caixin "new century" that in many of the framework cooperation agreements signed between the central enterprises and the local governments, there are similar clauses that will protect housing from other commercial projects in disguised form, or offer preferential treatment for attracting investment projects. This is the "hidden rule" adopted by the industry. Moreover, the local government is more willing to cooperate with the central enterprises and state-owned enterprises, because even if the low price transfer land is made public, local officials will not have the suspicion of "loss of state assets". {page_break}

Revitalize its own land

A bigger policy hole was built on the private land construction guarantee housing. Although the notice of the SASAC did not mention this, the central enterprises obviously paid more attention to it, especially the 78 central enterprises who were asked to withdraw from the real estate industry in March last year. At present, Beijing, Guangzhou, Shaanxi, Henan, Shanxi and other places have made public statements or issued relevant policies to encourage enterprises and institutions to use their own land to build affordable housing.

"At the moment, we are still observing the policy, and it is not clear how big the hole can be." A central enterprise insiders said that since last year, the "central enterprises to check out orders" in the implementation of the difficulty is great, few operational feasibility. The central enterprises rank in the "78 houses", and have large quantities of old factories and other land resources in the two or three line cities. He believed that such a policy would not only be considered as a major policy for building affordable housing in the country, but it would be hard to say that it did not consider the way for the central enterprises to hold large quantities of land resources.

According to public information, many local state-owned enterprises have been "testing water". In the first batch of projects for the first batch of affordable housing construction projects approved in 2011 by the Guangzhou Municipal Development and Reform Commission, the land protection housing projects of Guangzhou construction group, Guangzhou metro, Guangzhou Railway Group and other units were impressively listed. In Beijing, some state-owned enterprises with large number of industrial and warehousing sites, such as capital agricultural group, Beijing coal group and Beijing residence general, are also declaring projects to Beijing housing security office.

The general operation path is that enterprises and institutions apply to the local construction committee. In line with the land use planning and the overall urban planning, the land for industrial, warehousing and scientific research can be changed to residential land in accordance with the law and build affordable housing. Usually, the housing difficulties of the unit in line with the indemnificatory housing conditions will be given priority. The remaining part will be allocated by the local government to the residents who are eligible to apply for affordable housing.

But problems also follow. In the encouragement policies of all regions, there are no clear procedures for the enterprises and institutions to use their own land to build affordable housing financing channels, affordable housing types and distribution methods.

"The consequences will be very chaotic." Zou Xiaoyun, deputy chief engineer of the China Land Survey and Design Institute, is worried that if enterprises and institutions use enterprises and administrative funds to build affordable housing, then sell them to workers at a low price, in essence, welfare housing distribution, or enterprises and institutions in disguised form of "group buying" and so on, which all deviate from the original intention of "affordable housing".

There are few specific policies for building affordable housing. In August 2007, the "State Council's opinions on solving housing difficulties of low-income families in cities" (No. 24) stipulates that under the premise of city planning, the units can use their own land to raise funds and cooperate to build houses under the approval of the people's Government of the city, but they are only limited to the independent industrial and mining enterprises far away from the urban areas and enterprises with more housing difficulties. At that time, the Ministry of construction explained to this clause that the special unit should be managed in the area of affordable housing policy.

Moreover, in 2010, the implementation of the "guiding opinions on accelerating the development of public rental housing" issued by the seven ministries and commissions under the Ministry of housing and other departments stipulates that the units with more housing difficulties, with the approval of the governments of cities and counties (cities and districts), can use the land used for public rental housing in accordance with the law according to the approval of the municipal and county (city or district) governments, and the local government's public rental housing management will give priority to the employees who are eligible for the lease, and the excess housing will be allocated by the government uniformly, and the ownership will remain unchanged.

"Now, the local government has enlarged the policy openings under the pressure of affordable housing targets." According to the analysis of a reporter from Caixin's "new century [18.76 -2.39% shares", if the central enterprises take part in the construction of affordable housing in this way, they will have a huge impact on the entire housing market.

The above 78 "one of" central enterprises even said that only 78 central enterprises stock land is not good estimate, is called "Heaven quantity". Heng Tian Group, China electronic [0.83 -3.49%], China ordnance, Ordnance Group, major aerospace, iron and steel enterprises, there are a lot of land resources in all parts of the country. "But we have not yet calculated the stock of land resources in hand, and look carefully at the direction of the policy."

"In the past years, the main forms of affordable housing are allocated land to enterprises and institutions to raise funds for building houses, and the flow to the public is very few." Chen Baocun believes that the use of land owned by the central enterprises to build affordable housing, still can not escape the old way of housing, become part of the group's welfare and privileges patent.

Chen Baocun bluntly pointed out that from the past experience and the practice of some existing central enterprises, the possibility of operating land for self owned land security housing in the form of suitable housing is very large. The central enterprises can get the restricted property right at this low price. After several years, the lifting of the ban has made huge difference in the market. If the scale of such housing is large, it will impact the existing policy of "land auction" and the land revenue of local governments.

At present, the Ministry of housing, the Ministry of land and other relevant ministries and commissions have no relevant norms for the construction of affordable housing by enterprises. There are many differences in the interpretation and implementation of policies. There are no definite decisions on the types, property rights, financing channels and distribution ways of affordable housing built by enterprises and institutions. Caixin "new century" reporter contacted the Beijing housing security office on the above issues, and the relevant staff did not respond to it.

In this regard, Zou Xiaoyun suggested that local governments should set up affordable housing for the central enterprises to incorporate into the local overall housing construction plan, and standardize the management of land use planning, construction procedures, distribution, operation and other links, so that workers in the construction units who meet the guarantee conditions can be guaranteed first, but they must be strictly audited to prevent the distribution of corruption. But Zou Xiaoyun also said frankly, "this will be very difficult to enforce, and unfair things will happen." {page_break}

Central enterprises also need to make profits

"Social responsibility" or "political tasks" are obviously not the driving force for the central enterprises in the face of the SASAC's EVA assessment criteria. In spite of the temptation of all these ways, affordable housing is still a problem that most businesses need to solve.

China Metallurgical Group announced that its gross profit margin of affordable housing business could reach 12.5% in the annual report at the beginning of April, and subsequently explained that the results of various industrial links such as survey design, municipal matching, investment development and construction were accumulated.

Chen Baocun believes that gross profit margin 12.5% is only a theoretical deduction. "Design, municipal, construction and other links are stable profits, but the overall profit margin does not prove that development links are making money." Chen worked in a Real Estate Company under the China Metallurgical Group.

In fact, a few central enterprises, such as the central enterprises such as China Metallurgical Group, which have the advantages of the whole industrial chain, also have only [3.84 -1.79% share of China's construction, China stock exchange, China Railway Construction [6.42 -2.58% share], and China Railway [4.18 -1.88% share, and most of the central enterprises participate in the protection of housing construction.

Even if the Chinese architecture with the advantage of the whole industrial chain has the advantage of participating in the protection of the housing, it will take the construction mode as the main way to obtain stable profits from the construction links, while the proportion of the investment development mode is relatively small.

Vanke Group secretaries general Tan Huajie, in a telephone conference in early May, counted accounts of developers' participation in affordable housing, and pointed out that there is no economic viable mode at present. "The mode of agent construction is low risk, but it has little profit, so basically it can not constitute a real business." Tan Huajie assumes that even if the 10% of the national affordable housing is to be built by a company, the scale of investment will be about 150 billion yuan, and the management cost of agent construction will be the upper limit of 1% of the total cost. Then the management fee will not exceed 1 billion 500 million yuan, and the cost of personnel salaries and office expenses will be deducted.

Tan Huajie believes that pure investment development mode, whether it is government buy back or sell to buy people, developers are likely to lose money. "Developers use 20% of the capital to pry the project, the overall 3% profit is equivalent to 5 times of leverage, that is to say, from the input of funds to calculate gross margin can reach 15%." Finally, losing money or making profits depends on how long the project will take. Assuming that 20% of the money is borrowed, then the capital recovery time will be less than two years before the basic guarantee is guaranteed, because about 7% of the annual yield is basically the same as that of the bank loan.

"The probability that a security housing project will receive money within two years is not high, so losing money is a big probability event." Tan Huajie said.

Baoli real estate [9.83 -2.48% shares] chairman Song Guangju also told the media, Poly Real Estate in Beijing two housing projects are in a state of loss, the reason is that the government's sales plan has not been introduced, resulting in all projects can not sell on time.

"The development cycle of some affordable housing projects is very long, and there is no dynamic pricing mechanism in the process of construction. Labor costs and construction materials costs are rising, which will easily lead to losses." Zhang Guilin, chairman of Beijing residence general group, told reporters that the new century [18.76 -2.39% shares had already been built for more than ten years. Due to the rising cost of demolition and construction, the huge loss of 2 billion 118 million yuan in the book calculation resulted in no continuation of the project.

China Central Metallurgical Group, a big affordable housing giant in central enterprises, also suffered from the embarrassment of the local government in arrears of construction payments in Shenyang.

People familiar with the matter said that at the relevant meetings of the Ministry of housing and the SASAC, a number of central enterprises with more affordable housing businesses have reflected the low profit margins stipulated by the regulations, and demanded an appropriate increase in profit margins.

Even so, affordable housing projects are not what central enterprises want to do. "For example, the land of the economically affordable housing is the allocation way, which is equivalent to the planned form of the government orientation, not for whoever wants to do it." According to Lou Yingrui, Minister of market development of China Railway Construction real estate group, if the policy is in place and the operation standard is standardized, the economic housing projects will still be "in the first place". If the funds can be recovered in one year, the rate of return of funds can reach over 10%. But these "head up" projects are not easy to get, and Lou Ying believes that local governments want most of the central enterprises to do "no head" public rental housing and low rent housing projects.

In this year's 10 million affordable housing scheme, the conventional sense of affordable housing - affordable housing, low rent housing, public rental housing accounted for 60%, a total of about 6 million units, of which rental security housing accounted for more than 60%. The indicators of affordable housing claimed by provinces and municipalities also generally follow the proportion.

"The number of public rental housing has increased substantially this year. The biggest problem of this part of the affordable housing is that the policy is not perfect and the profit pattern is not clear." A central enterprise real estate company official said, generally speaking, the government does not have the resources to carry out a large number of repurchase, at the same time, the enterprise lacks the exit mechanism, the return cycle is too long, "the annual rental income is very small, even the interest rate of the same period is less than the same period". Therefore, most enterprises still do not want to participate in the construction of public rental housing.