Hangzhou Hot Money Pouring Into Residential Projects Supervision Tips 7 Risk Points "Sniping" Investment Funds

On September 29, the official website of Hangzhou Municipal Bureau of housing protection and housing issued the risk warning of house purchase, reminding the vast number of buyers to be cautious of the seven "whats" when purchasing commercial housing, and announced the reporting telephone number.

Hangzhou housing management bureau clearly pointed out seven major risk points that buyers should pay attention to: all development enterprises that have not obtained pre-sale permit to collect the purchase price are risks; All development enterprises require the purchase money into the non regulatory account is the risk; Any regulatory bank and account provided by the development enterprise is inconsistent with the pre-sale announcement or online signing contract; All development enterprises in the name of providing preferential purchase incentives to sign offline contracts is the risk; It is the risk that the development enterprise adopts the way of after-sale leasing to sell uncompleted commercial housing; All the development enterprises promise that commercial office projects can be changed into residential buildings, which is the risk; All development enterprises promise that commercial office projects can be gas into the home is the risk.

Hangzhou housing management bureau said that next, the urban two-level housing management departments will actively implement publicity, urge development enterprises to place risk warning signs in the sales department, and increase the function of major risk warning in the commercial housing lottery registration platform, so as to protect the legitimate rights and interests of buyers.

Hangzhou's move is aimed at commercial projects, especially commercial flat floor projects with the nature of similar residential buildings. This has something to do with the recent boom in Hangzhou commercial flat floor trading. According to a person familiar with the matter, in recent months, the price of commercial flat floor projects in Hangzhou's urban area has increased by 30% - 40%. For example, a project in Xihu District has increased from 20000 yuan / m2 in the first half of the year to 30000 yuan / m2 in a few months.

The difference between the primary and secondary housing prices has led to a lot of capital pouring into the primary housing market. However, since the new deal, many investment funds have been squeezed out of the Hangzhou property market, and the recent decline of second-hand housing is relatively obvious, so the investment funds "enter cautiously". Combined with the influence of the policy of limited purchase and loan and the regulation of bank interest rate, the threshold of Hangzhou's entry into the market has been raised a lot. The funds began to aim at commercial residential projects with unlimited purchase and loan.

"Originally, there were some unsalable commercial projects, and intermediaries also took the opportunity to sell them." an investor in a long-term apartment told 21st century economic news that the reason for intermediary sales of apartment products recently is that it is an investment form that can be used as asset allocation.

Similar to the ability of absorbing money in Hangzhou market recently, the hidden risks of similar residential projects have also attracted the attention of relevant government departments.

In the first half of this year, about 750 sets of commercial large flat floors with an area of more than 300 square meters were sold in Hangzhou, and 599 units were sold in the whole year last year, with the trading volume of 1.25 times that of the whole year last year- IC photo

Property market goes down, capital turns

According to the data of third-party institutions in Hangzhou, about 750 units of commercial large flat floors with an area of more than 300 square meters were sold in the first half of this year, and 599 units were traded in the whole year last year, with the transaction volume of 1.25 times that of the whole year last year.

The lottery winning rate of Hangzhou's first-hand property market is getting smaller and smaller, and Lin'an is only in Lin'an, which is more than 45 kilometers away from the downtown of Hangzhou. Those who hold money and need to live in urban areas turn their attention to urban apartment products. According to industry insiders, about half of the residential products currently on sale in Hangzhou are existing or quasi existing houses. For those consumers who have requirements for the location and lack room tickets, if they can buy hardbound apartments and check in, they can save a lot of time and cost.

Since July this year, the turnover of second-hand housing in Hangzhou has been greatly reduced; As of September 28, the turnover of second-hand housing in Hangzhou was less than 3401 sets, a new low in the year. This is also a continuous decline in turnover since April this year. After Hangzhou issued a new policy on the property market on August 5, the second-hand house prices, which had soared by 30% - 40%, also began to fall. With the influence of taxes and fees and the lengthening of bank lending cycle, the second-hand housing market gradually went down.

Funds began to shift to commercial flat floors or apartments. In fact, in the past two years, the rise of the Internet red economy and the influx of foreign hot money have led to a shortage of commercial flat floor in Hangzhou. As many as several thousand a set of commercial flat floor also caused competition.

According to Cray data, from January to May this year, a total of 601 sets of commercial flat floors with an area of more than 300 square meters in Hangzhou were completed, with a total transaction area of 264 thousand square meters, a total transaction amount of nearly 6 billion yuan, and an average transaction price of 10.3 million yuan. In contrast, in Hangzhou last year, a total of 661 sets of commercial large flat floors with an area of more than 300 square meters were sold. In other words, the turnover of this year's five months is close to 90% of last year's.

According to good housing data, in August, the number of second-hand housing contracts in Hangzhou urban area was the top 10, and the category of residential projects accounted for half.

The current market situation of commercial apartments in Hangzhou reminds many people in the industry of Shanghai in 2016, when Shanghai's commercial housing projects were also purchased in a rush. At the beginning of 2017, after the crazy influx of funds into the apartment market, Shanghai clearly stipulated that the sales of commercial apartments would be suspended. The path of investment funds in Hangzhou is very similar to that in Shanghai.

At this time, Hangzhou housing insurance administration bureau issued the house purchase risk warning, which has a high correlation with the blind inflow of hot money into apartments and the outbreak of apartments. It is worth paying attention to the article in the risk prompt that "any developer who sells uncompleted commercial housing by means of after-sale leasing or in disguised form is the risk", which restates the risk of after-sale leaseback. This risk is not new in the quasi housing market.

According to Qianjiang Evening News, blue diamond Tiancheng, a complex located in Shenhua plate, sold shops and parking spaces on a leaseback basis a few years ago, but many owners said they had not received the rent for many months.

In June 2019, Mr. Dong bought a 10.72 square meter shop of the above-mentioned project through the intermediary, which cost him $192800. "At that time, we promised a very generous rent return, but we were in arrears for two months last year, and since this year, we have not paid one month's rent. Now, let alone investment, it would be nice to get back the principal."

In the contract presented by Mr. Dong, it is clear in the liability for breach of contract that if Party A fails to obtain the agreed monthly revenue rent during the period of entrusted operation of the purchased shop for more than three months continuously or accumulatively, the guarantor must unconditionally buy back the shop according to the contract price in the fourth month, and make up for the unpaid income rent to Party A.

Mr. Dong repeatedly urged, the reply is: "no money to pay rent."

In 2018, blue diamond Tiancheng sold mechanical parking spaces of 170000 yuan / piece, ground parking spaces of 270000 yuan / piece, and shops of 190000 yuan / unit to investors, and promised the corresponding rent rebate. According to the advertisement made by the sales department at that time, the total return rate of a 170000 yuan parking space in 20 years can reach 365%.

But so far, hundreds of people have not received rent for three months or more. Hangzhou Zheyuan Commercial Management Co., Ltd., the operator of the project, is a third-party company entrusted by blue diamond Tiancheng. At present, it is deeply involved in a number of lawsuits related to rent arrears.

Another uncompleted building in Hangzhou, ganglongcheng, has a similar situation. The shops of this project have done after-sale leaseback in the way of dividing property rights, and have promised high returns to the owners. But since then, because of the break of capital chain, the leaseback rent can not be realized.

As a matter of fact, many commercial projects have been launched by consumers all over the country. These projects promise to rent back and buy back, and finally all kinds of problems break out. There are also some self-employed customers who have bought apartments that have been renovated by the commercial office and found that the original contract said that gas was supplied, but only electricity was used when the house was closed.

Hangzhou made it clear that the commercial flat floor should not be connected to the gas pipeline, which has a great impact on many projects in the seller's office, and even caused customers to check out. More than that, Hangzhou has carried out comprehensive rectification of potential safety hazards for commercial and residential flat floors. Those commercial large flat floor projects that have been delivered may also lose some residential functions promised by the developers due to regulatory upgrading.

Tightening regulation

The risks of commercial projects with the nature of quasi residential buildings are so great. From the Hangzhou housing insurance and Housing Administration Bureau issued house purchase risk tips, it can be seen that the government is weakening the so-called investment value of commercial flat floor. According to the 21st century economic report, some real estate enterprises have already signed contracts with gas companies for some commercial large flat floor projects, but they are still called off. They are unable to fulfill the promise of gas supply, which leads to a wave of customers returning their houses, which aggravates the risk of repayment of real estate enterprises.

In addition to the crazy influx of hot money, the key purpose of government tightening regulation is to crack down on illegal operation of projects. It is understood that for those commercial flat floors with the label of "hardbound residence", most of the project land transfer clearly stipulates that "it is not allowed to build apartment type office, hotel type office and other residential function rooms".

As early as January 2012, Hangzhou issued the implementation opinions on further standardizing the planning, design and management of non residential projects such as commercial office, which requires that the toilets of non residential projects should be set in a centralized way according to each floor. This once made Hangzhou's small area of Hotel Apartments almost extinct.

On April 24, 2018, Hangzhou Municipal Planning Bureau issued the letter on the restrictions on additional residential buildings under the planning conditions of commercial and commercial land to be transferred again, which specified "the restriction requirements for the commercial and commercial land to be transferred within the scope of Hangzhou urban area (including 10 districts)".

Since the issuance of the letter, except for some land plots that explicitly permit the construction of hotel style apartments and other residential buildings, the planning conditions of commercial and commercial plots transferred within the scope of Hangzhou ten districts clearly state that "apartment type office, hotel type office and other residential functional buildings shall not be constructed, and the minimum property division unit shall not be less than 300 square meters". This is the origin of 300 square meters of commercial floor. Since then, although small-scale hotel apartments are no longer approved, but 300 square meters and above hotel apartments have the potential to bloom everywhere.

At present, there are more than 45 300 square meter level leveling projects on sale in Hangzhou. In addition, there are a large number of projects to be put into the market. In recent years, most of the commercial projects have been built into large flat floor apartments with residential functions. The commercial flat floor without restriction on purchase has become the first choice for people without room ticket. At the same time, the commercial flat floor with no price limit is superior in quality compared with the residential buildings with "high price and limited price". Therefore, it can better meet the needs of some high-end improved customers for high-quality living. For developers, the profit space of large flat floor residential products is much larger than that of office buildings.

It is worth mentioning that not long ago, Hangzhou stopped the construction of commercial villas in the urban area. According to the "notice on internal affairs" issued by Hangzhou Municipal Planning and natural resources bureau, in the future, in Hangzhou residential quarters, the bottom merchants can only be arranged in line with the houses, and can only be used as shops along the street, instead of being planned into single family commercial villas, thus increasing the value of goods in disguise, and the new regulations cover the ten districts of Hangzhou.

Industry insiders pointed out that this will involve a lot of original planning "Shangshu" project readjustment program. Among the first batch of "Shangshu" re planning projects, Rongxin has two projects, one of which is developed in cooperation with Binjiang.

The aforementioned industry insiders pointed out that as the profit breakthrough of commercial villa and commercial flat floor is blocked, the subsequent profits of Hangzhou developers in Hangzhou market may have to undergo a more severe test, and the cooling down of Hangzhou land market is also beginning to show signs in the second centralized land supply.

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