The Matthew Effect Of Real Estate Intensified In The First Ten Months: The Strong Will Always Be Strong, And Small And Medium-Sized Real Estate Enterprises Will Survive

The property market in 2019 is too sad. The ups and downs are like a roller coaster. The industry is seriously divided. Some real estate enterprises have walked on the edge of capital chain rupture.

From the sales data of the previous October, the strong are always strong, and the industry concentration has further improved.

By the end of October, 25 real estate enterprises had sold more than 100 billion yuan, with an average sales of 233.39 billion yuan. At the same time, many small and medium-sized real estate enterprises are facing a crisis of survival, and the news of explosion continues to spread.

Compared with the head real estate enterprises with larger scale, small and medium-sized real estate enterprises have fewer financing channels and higher financing costs. In addition, they have aggressively increased their leverage in the past few years, which has become a huge burden on them and may collapse at any time.

The real estate industry has transferred from the increment era to the stock era. In the era of stock, the Matthew effect of the industry intensifies. Under the competition of big fish eating small fish, the strong are always strong, and the weak are facing a survival crisis.

Struggle for "Nine Gold and Ten Silver"

The traditional golden age of "nine golden years and ten silver years" has passed, and the sales performance of the real estate market around the country is flat.

According to Kerui data, the new house transaction in October and the land market continued the downward trend of "Golden Nine". The new house transaction volume in key cities fell by 6% and 10% on the same month and month on month basis, respectively, with a larger decline than last month.

However, the head and mainstream real estate enterprises showed strong vitality, leaving their rivals far behind.

According to the statistics of Centaline Real Estate Research Center, there are 14 benchmark real estate enterprises that announced their sales in the first 10 months of 2019. The total sales of these 14 enterprises in the first 10 months of 2019 were 2193.4 billion yuan, up 17.2% year on year. In October alone, the total sales of these 14 real estate enterprises reached 280.5 billion yuan.

The sales of Country Garden, Evergrande and Vanke in the first 10 months all exceeded 500 billion yuan. Under the intensified promotion, the sales of Evergrande and Country Garden in October reached 90.3 billion yuan and 85 billion yuan respectively.

According to the data of China Index Research Institute, from January to October 2019, the average sales of the top 10 real estate enterprises was 376.26 billion yuan, with an average sales growth rate of 14.7%; the average sales of the 11-30 enterprises was 125.69 billion yuan, with an average growth rate of 24.4%; the average sales of the 31-50 enterprises and the 51-100 enterprises were 69.2 billion yuan and 32.58 billion yuan, with an average growth rate of 26.3% and 19.3%, respectively.

Kerui Research News said that the overall scale growth of the industry slowed down, but the cumulative equity sales scale of top 100 real estate enterprises by the end of October still achieved a year-on-year growth of nearly 5%, slightly higher than the level of about 4% in the first half of the year.

From January to October 2019, the threshold of equity sales amount of each echelon of the top 100 real estate enterprises has slightly increased compared with the same period last year.

Among them, the top 10 real estate enterprises' equity threshold reached 138.06 billion yuan, with a year-on-year growth of up to 16.4%. The thresholds for the amount of equity of the top 20 and top 30 real estate enterprises were 85.68 billion yuan and 60.12 billion yuan respectively, with threshold increases of 3.4% and 5.7% respectively.

The competition pattern of top 50 real estate enterprises has intensified, and the threshold of equity amount has increased by 12.5% to 41.26 billion yuan compared with the same period last year. By the end of October, the threshold value of equity of top 100 real estate enterprises had reached 14.78 billion yuan.

Zhang Dawei, chief analyst of Centaline Real Estate, believes that compared with the past data, the sales of real estate enterprises in the first 10 months of 2019 continue to differentiate. Compared with the same period in 2018 and the same period in 2017, the growth rate of most enterprises was more than 50%. In 2019, most enterprises were mainly stable, and the growth rate of some enterprises slowed down significantly. The performance of most enterprises was gradually flat.

There are also small and medium-sized real estate enterprises with negative growth. For example, the cumulative sales of Jingrui and Sunshine in the first 10 months fell by 5% and 12.7% respectively year on year.

On the other hand, the financing costs of real estate enterprises are also seriously differentiated.

In July, the interest rate of a Hong Kong dollar bill issued by CNOOC Real Estate was only 2.90%, refreshing the lowest interest rate in the industry. In the same month, the coupon of the US dollar bonds issued by Taihe Group in Singapore was up to 15%. The same bonds are issued overseas, and the interest rate differs by 5 times.

According to the data of Essence Securities, the median comprehensive financing costs of TOP10, TOP10-20 and TOP20-50 are 6.23%, 6.48% and 6.87%, up 12BP, 68BP and 96BP respectively from 2018.

From the perspective of the nature of real estate enterprises, the financing costs of medium-sized real estate enterprises and non-state-owned enterprises have increased significantly. The median financing costs of central enterprises and local state-owned enterprises were 4.91% and 5.52% respectively, up 12BP and 12BP respectively compared with 2018, while the median comprehensive financing costs of non state-owned enterprises were 6.91%, up 51BP respectively compared with 2018.

Existence crisis looms

For small and medium-sized real estate enterprises, "bustle" belongs to others, they just want to "live".

In October, when the head real estate enterprise reaped abundant cash flow due to promotion, an employee of Sansheng Hongye, a small and medium-sized real estate enterprise in Zhejiang, was "collecting debts" from his boss.

The reason is that three years ago, the financial products issued by Sansheng Hongye to employees were overdue and the company's financial staff found that some company executives cashed their own financial products or transferred the company's funds.

Chen Jianming, the chairman of Sansheng Hongye, immediately held a communication meeting. At the meeting, he cried in tears and said that he would try to recover the money transferred by his sister to pay the employees' financial funds, but he could not guarantee the money transferred by other executives.

The scene of "the company explodes, all parties ask for money, and the chairman is crying" staged by Sansheng Hongye reflects the survival crisis of small and medium-sized real estate enterprises.

Since this year, the explosion of Yihe Real Estate, an old Cantonese real estate enterprise, and the bankruptcy of the famous Yinyi Group have all revealed the cruelty of industry competition in the stock era.

The judgment of economist Ma Guangyuan is a wake-up call for small and medium-sized real estate enterprises.

He said that China's real estate will return to three "20%": only 20% of developers in the future market will survive, 80% will die, and there are too many developers in China, 80% will die, and there is no shortage of houses; Only 20% of cities and only 20% of buildings.

He believes that the high investment growth in real estate is over, the price of China's assets will not continue to rise, the population and savings will no longer support real estate, and residents' savings have shifted from high savings to high liabilities.

Zhang Dawei pointed out that it is expected that the sales of real estate enterprises will still be under great pressure in the next two months. From the perspective of policy expectation, the downside risk in the subsequent market is very large, and the expectation of policy tightening is obvious, including credit and other policies that will restrain the market.

Large developers pay more attention to the industry. Sun Hongbin, Chairman of the Board of Directors of Rongchuang China, appealed at the annual meeting of real estate finance of Minsheng Bank to support real estate M&A, which is the fastest way to solve risks.

"The risks in this industry are economic risks and financial risks. If (the developer) cannot repay the bank's money, it will take about four years on average from default to auction, three years if it is fast, but it will be solved in three months or half a year after M&A, so M&A is the best way to solve the industry risks."

He predicted that "the market share of the top five companies in this industry is about 18%, and I estimate that the top five companies in this industry will account for 30% in the next five years".

Sun Hongbin further explained the basis of his judgment. The top five cities in the automotive industry accounted for 51%, the beer industry 73%, the air conditioning industry 78%, and the mobile phone industry 83%. Therefore, the top five cities in the real estate industry accounted for 30% in five years.

Sun Hongbin said that this year the scale of the real estate industry will be about 16 trillion yuan, and this scale will probably remain for many years.

Previously, Xia Haijun, president of Evergrande, also said that the "cake" of the incremental market was about 15 trillion yuan, and all developers were fighting in this limited "red sea".

At this time, "live" has become the only requirement for small and medium-sized real estate enterprises. Judging from the sales situation this year, the threshold for the survival and development of the industry in the future has been raised to 100 billion to 200 billion yuan. If it cannot reach this scale, it must have very special product power to survive in the competition.

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