Self Financing Property Is Not Enough To Sell SOHO, China'S Transformation Is Lost.

SOHO China's turnover in 2013 was 14 billion 621 million yuan, of which the rental income of investment property was only 279 million yuan. Up to the first half of 2014, only 3.45% of the company's 4 billion 750 million yuan revenue came from rental income.

In September 29th, SOHO China disclosed that the company will enter into a pre-sale framework agreement with Shanghai Ctrip, and it plans to sell 100 thousand and 200 square meters of property and some supporting facilities in volun SOHO at a price of 3 billion 50 million yuan. The remaining part of the SOHO will continue to be held by SOHO China as an investment property.

The Shanghai SOHO Helen square and SOHO Jingan square, which were sold in early 2014, are the third Shanghai projects that SOHO China has transferred this year.

The move is doubtful. SOHO China, which has already announced the success of the transformation, has returned to the old road of retail sale or has already achieved the illusion of renting and selling. This very stylish commercial real estate company is still on its way.

A report released by Citigroup at the end of 8 2014 also highlighted the above situation. The report shows that Citigroup's outlook for SOHO China is more prudent, mainly because the company is still looking for opportunities to sell unfinished projects in order to obtain short-term profits to support long-term rental growth.

Reporters noted that SOHO China 2013 annual report shows that the turnover of the company was 14 billion 621 million yuan, down nearly 10% from the same period last year. Among them, the sale of property units recorded 14 billion 342 million yuan, the contract sales amount was about 4 billion 687 million yuan, and the rental income of investment property was only 279 million yuan. Up to the first half of 2014, only 3.45% of the company's 4 billion 750 million yuan revenue came from rental income.

It is hard to say that the proportion of rental sales that is so disparate is "simultaneous", let alone "all assets will be self-sustaining investment property after 2015". Insiders say that after 3 years of unusually complicated current situation, SOHO China, which hopes to complete the transformation in 2015, is still in the first stage and the problem has not yet been solved. In the future, the road of SOHO China's transformation will still be long and turbulent.

"If we want to set a standard for success in transition," said Yu Maohua of Chang Fu Hui Yin fund, "we can see whether SOHO's rental income in China can account for 30% of total revenue. But now business is sluggish, and the huge impact of electricity providers is not too optimistic. In the future, can we succeed in transformation or look at the stock price of SOHO? After all, capital has the most acute sense of smell.

Scattered sale mode is difficult to continue

On the background of SOHO's transformation in China, Pan Shiyi, the chairman of the company, himself said that "strategic layout, internal and external pressures, high sales tax, and over half a year's profits have been paid taxes"; Zhang Xin, chief executive of SOHO, said that the biggest driving force was the "call" of the rental market.

Song Yanqing, chief executive of Rand, told the investment Times reporter that the main reason for the transformation of SOHO in China is that the bulk sales mode is indeed unsustainable.

SOHO China has been taking the retail sale mode for more than ten years since its first project, "modern city". The outstanding problem of this mode is that the owners, managers and managers of the real estate are separated, and the interest demands are not unified, so it is difficult to form the joint force of the brand and the market.

The deeper reason is that in the bulk sale mode, SOHO China, as a developer, has made high profits, and even to some extent overdraft future property value-added benefits, which leads to the owners' difficulty in obtaining the expected investment. Under the pressure of high rent, it is difficult for operators to get the expected operating income. And the single win mode is unlikely to last for too long.

From the "development sale" to the "development holding" business model, there is also the impact of the transformation of the economic environment. Shanxi coal mine economic downturn and political fluctuations, SOHO China's main customer group - coal bosses also no longer exist, which led to the SOHO China's sales model unsustainable.

Wang Keyi, a real estate partner in Xiangan, said that with the global economic contraction and a series of domestic "ironing" measures for various economies, the local tyrants who gained huge profits through the prosperity trend and the imperfect system will be reduced rapidly in the foreseeable future. In fact, the global economy is stepping into the cycle of protecting employment and basic welfare for most people, while China adopts the "electricity saving mode". Relying on local tyrants to achieve high turnover and high premium commercial varieties, the trend of entering low-temperature operation is irreversible. From luxury to real estate, without core competence and adequate financial security, entry into these fields is tantamount to a knife dance.

Yu Maohua also affirmed this trend, which shows that such a background is not only a problem faced by SOHO China, but also a common problem faced by all developers who are mainly developed by commercial development and high-end residential development.

"Because the total price of these properties is very high, the recession of Shanxi's coal and energy and the whole private economy is really a big impact on the pure" development and sale "mode, so the sales strategy should also be changed. SOHO China's recent property in Shanghai is sold to an American listed Online Travel Corporation. After that, the company may collaborate with some large investment institutions like Vanke metropolis to sell core properties to institutional investors through light asset operation, both as developers and operators.

Preparing for counter cyclical mergers and acquisitions

For the transformation, under the condition that the rental income is small, SOHO China has to make another calculation.

Yu Maohua analysis said that the cyclical adjustment of the real estate industry is far from over. In the future, it is difficult to get a good lot through the auction and auction. SOHO China will participate in a series of assets and land mergers and acquisitions in order to get some high-quality property and land, which can be regarded as a transformation way. The sale of Shanghai projects is also an important means to withdraw funds.

In early 2014, the Financial Street Cmi Holdings Ltd announced that SOHO China has reached an agreement with Financial Street to sell the "Jingan project" and "Helen project" in Shanghai at 5 billion 232 million yuan. On the basis of a portion of the volley SOHO, which is planned to sell at 3 billion 50 million yuan, the company has realized 8 billion 280 million yuan through the sale of the Shanghai project.

In the above transactions, SOHO China has said that the renewal of several non core assets under the right opportunity will continue to be a part of the company's long-term strategy. The company will continue to pay attention to market opportunities. Buy High quality assets in prime locations in Beijing and Shanghai.

　　 Housing market The situation is still unclear, and the adjustment that is likely to happen will provide opportunities for cash rich and powerful developers to acquire land or projects. This counter cyclical acquisition is exactly what SOHO China has been doing for many years in terms of land and project reserves.

　　 SOHO Chinese management also made clear in its 2014 semi annual report that the company is actively preparing funds for possible acquisitions. In the next few years in 2014, the company will continue to focus on market conditions, "to explore opportunities to acquire high-quality assets in prime locations in Beijing and Shanghai, and strive for maximum returns with reasonable inputs".

Yu Maohua told reporters analysis, "Zhang Xin began to invest overseas last year, also considered part of the transformation of developers, and the timing of buying is not bad; in addition, it is sold by leased, real estate development from the first line to the second line, now in addition to Beijing, other areas are shrinking."

However, it should be noted that even if holding cash, it does not mean that SOHO China can gain gains in the Beijing Shanghai market. Never forget what happened before. The development of SOHO China project entering Shanghai market is slow, and the Bund 8-1 competition is also lost to Fosun Group. Recently, the company scramble for Beijing's dual land Xicheng District Huajia Hutong plot, and was also suppressed by Huarong at a high price of 7 billion 460 million yuan.