5 Trillion Old Residential Area Market Transformation: Social Capital Intervention Profit Model To Be Solved

According to the report on the work of the government, 39000 old urban communities will be renovated this year, supporting the installation of elevators and developing diversified community services such as dining and cleaning.

At the same time, it is regarded as an important opportunity for "upgrading the old housing estate" and "upgrading the old residential area" as an "important opportunity" for "upgrading the old residential area".

The transformation of old residential quarters is also called "old reform", but it is different from the old urban reconstruction. The reconstruction of old residential areas basically does not involve demolition, but focuses on the maintenance and improvement of infrastructure and public facilities, while the old city reconstruction and urban renewal involve a large number of demolition and reconstruction.

According to the director of the Institute of environmental protection, such as the old building materials industry and the cement industry in the upper reaches of Tsinghua University, it can directly stimulate the construction industry, such as the construction industry of 5 trillion yuan, and the construction industry of the lower reaches can be directly promoted. In addition, 5g, artificial intelligence, industrial Internet, Internet of things and other related infrastructure will also be driven.

"The old community after transformation should not be a separated island, but should rely on the new infrastructure to realize the networking and digitization of future residential areas, so that the architectural space can form a joint force organization." Kong Peng told the 21st century economic report.

Analysts pointed out that although the industry has broad prospects, it still faces practical problems in terms of profit model, social capital enthusiasm and other aspects in actual operation. In the future, it needs to make joint efforts at all levels, such as policies, enterprises and society.

"The old break the small" in the core area

The old residential area refers to "before 2000, the backward public facilities affected the basic life of residents and the residents had strong willingness to transform". The old community is usually built by the government and the unit before the unit reform. Compared with the residential area built after the housing reform in 1998, the public facilities are backward and the supporting facilities are not complete.

According to the preliminary statistics of the Ministry of housing and urban rural development, there are nearly 160000 old residential areas in China, involving more than 42 million households, and the construction area is about 4 billion square meters.

The market space of old residential area reconstruction mainly exists in large and medium-sized cities.

According to the data of the shell property dictionary, the number of recorded residential areas in 20 key cities is 153900, of which 59600 old residential areas with the age of more than 20 years account for nearly 40%.

In terms of cities, the three cities with the largest number of old residential areas are Shanghai, Chengdu and Beijing. The number of old residential areas is 14000, 5200 and 5100 respectively. In terms of the proportion of old residential areas in the total stock, Shanghai, Jinan and Beijing are the highest, accounting for 61%, 49% and 47% respectively.

Old communities are generally concentrated in the old urban areas of the city. Taking Beijing as an example, more than 80% of the old residential areas are located in the "six districts of the city", and nearly 60% of the old residential areas in the western city are old ones.

The old residential area has small living space and poor environment. From the shell transaction data in the past five years, nearly half of the old houses in Beijing have an area of less than 60 square meters. Less than 20% of the old communities have no elevators. These ratios are higher than the average level of the whole city.

At present, the housing price of the old housing estate is lower than that of the old housing estate. However, it is hard to waste the old housing resources in the old residential area.

The market space for the transformation of old residential areas also exists here.

The Ministry of housing and urban rural development of the people's Republic of China (MOHURD) has preliminarily divided into three categories: the first is to ensure the basic supporting facilities, including the maintenance and improvement of municipal infrastructure such as water, electricity, gas and roads; the matching of garbage sorting facilities; the installation of elevators, etc. The second is to upgrade the infrastructure, which can be equipped with parking lot, activity room, property room, etc. The third is to improve the content of public services, such as pension, child care, culture room, medical care, meal assistance, housekeeping, express delivery and other facilities, and improve basic public services and basic public environment.

According to the research data of Mingyuan Real Estate Research Institute, it is conservatively estimated that at least 4.54 trillion yuan will be invested in the transformation of old residential areas in China.

Guojin Securities pointed out that as a work of "connecting rod" shed reform entering the center of the stage, the old reform does not involve housing demolition and resettlement compensation. It is more about the repair of existing houses, the reconstruction of water, electricity, optical fiber and other infrastructure and the improvement of surrounding supporting service facilities. Although the old residential area transformation has a weak stimulating effect on the overall investment of real estate, the pulling effect on the demand of related fields is still obvious.

According to the agency's estimation, in the field of consumer building materials, the market space of waterproof materials can reach 23.6 billion yuan; the market space of coatings is 51.8 billion yuan; and the market space of pipe materials is 27.3 billion yuan.

The way to solve the problem of people's livelihood

In recent years, the transformation of old residential areas has been dominated by financial funds. From the current practice, in addition to the central financial subsidies, local government special debt, bank credit is also an important source of funds.

On April 14, this year, the executive meeting of the State Council called for the establishment of a mechanism for the government, residents and social forces to reasonably share the reform funds. The central government should provide subsidies, and local governments should give preferential loans to encourage social capital to participate in the transformation and operation.

For social capital, the biggest problem in the transformation of old residential areas is the profit model. Because it will not demolish old houses for reconstruction, there is no possibility of making profits by selling new houses; for the funds invested in new elevators, new medical and child care facilities, road construction and other public facilities, many of them can only rely on property fees and parking fees to obtain returns in the future.

Generally speaking, the enthusiasm of social capital to participate in the transformation of old residential areas is not high. In the view of many investors, low profit margin and long investment return cycle are the main commercial difficulties faced by the old residential area transformation. Kong Peng believes that the main reason is that there is no clear business model, there is no clear relationship between supply and demand of products and services and service standards.

Kong Peng said that the transformation of old residential areas belongs to people's livelihood issues. "People's livelihood issues need low interest capital support to come up with a business model, which is not completely the same as the logic of real estate development. If there is no leverage and low interest loans, the return on the transformation of old communities will be very difficult. "

Kong Peng said that efforts should be made to promote the development of the old industry. Owners need to understand that the transformation of old communities is not a welfare behavior subsidized by the government, but a business activity supported by the government. If you want to get a better life, you must participate and pay. As an enterprise participating in the transformation, you must have enough patience and be able to provide products and services that really create value for end users. On the policy side, the government should not only provide low interest capital Besides financial support, the extensive management and charging mode of old residential areas should be changed to realize the value sharing between residents and enterprises.

They are more willing to invest in urban renewal projects.

The arrival of the era of stock housing and the scarcity of land resources in the first and second tier cities urge the real estate enterprises to increase the land reserve through the old reform. In 2017, Vanke increased the layout of "urban renewal" and actively expanded to the second and third tier cities. Country garden also said in 2017 that it would increase investment in the old reform and take the old reform as "one of the main development directions in the four first tier cities".

Yihan think tank points out that at present, large developers and financial real estate enterprises (real estate funds) are the main enterprises involved in the transformation of old cities, and these two main players have their own advantages. "Real estate enterprises rely on the advantages of up and down the industrial chain of real estate, and have obvious advantages in the transformation and construction of comprehensive projects; due to the strong capital strength, real estate funds often adopt the way of combining light and heavy assets in the old reform, which has certain advantages in capital and operation."

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