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The Current Situation and Future of Real Estate Industry(III)

(2)The enthusiasm of land investment is still high

Land is the raw material for the development and sale of goods by housing enterprises, and it is the source of production and development. In recent years, the land investment of large-scale housing enterprises has gradually increased. In 2017, 28 large-scale enterprises took a total of 532.03 million square meters, a year-on-year increase of 157%; the accumulated land acquisition amount was 2,479.1 billion yuan, a year-on-year increase of 96%.

According to the statistics, in 2017, the amount of land acquired by TOP10 enterprises accounted for 48.5% of the TOP50 enterprises. The advantages of land resources of large-scale excellent housing enterprises became more prominent. Small-scale housing enterprises gradually lost their voice in the land market, and the sales growth in the future was limited. The concentration has increased.

(3) Coexist adherence, transformation, and departure

Along with the constant changes in the market and the deepening of regulation and control, housing companies of different scales have played a booming role in this hot wave of sales. Leading housing companies have achieved strong results due to the previous layout advantages, and medium-sized housing enterprises. Thinking about how to break through in the market strangulation, and some small and medium-sized housing enterprises have gradually begun to explore their future survival. Real estate companies have never lacked the opportunity to counterattack, but they are also facing the horror of step by step. The decision-making of future development is always an important issue for all housing companies. Some housing companies choose to adhere to the development business, some housing enterprises to find new profit points, and some housing companies choose to give up this industry to completely withdraw.

The leading enterprises and medium-sized housing enterprises are the mainstays in the development of the business. The real estate industry is focused on scale, and only the development business can quickly make large-scale and maintain the competitiveness of enterprises.

There are also a handful of companies that are looking for new business models and growth points through transformation. Vanke stressed that ”the real estate market will slow down and the overall profit margin will face downward pressure. Vanke will be biased towards various light assets and transform into comprehensive urban property service providers to develop a variety of new industries”. There are also many housing companies subject to financial pressure, the size of the soil storage, etc., choose to sell assets or withdraw. Wanda Commercial sold its 13 cultural and travel projects and 77 hotel projects to Sunac and R&F for a price of RMB 63.7 billion. SOHO China sold a total of six projects in three years, while Pan Shiyi said that he would no longer take new projects. There are also many small and medium-sized developers that have closed down or are being acquired by big developers. According to statistics, there were more than 20 listed companies in 2017 or the entire equity of the real estate company held by the transfer, or the overall divestiture of the real estate business.

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Knowledge about Real Estate(III)

The real estate market

The real estate market is a place or field for trading activities such as the sale, lease, sale, and mortgage of real estate. The property includes houses that are used as personal consumption materials for residents, as well as factories and office buildings that are used as production materials. Therefore, the residential market is a part of the lifestyle data market and the non-residential property market is a part of the production factor market. Real estate is also a natural commodity, so establishing and developing a market for real estate transactions is a requirement for economic operations.

The real estate market is the basic condition for the real estate industry to carry out social reproduction, and can drive the development of many industries such as construction industry and building materials industry. Through the market mechanism, the real estate market can realize the value in a timely manner, which can improve the economic benefits of the real estate industry, promote the effective allocation of real estate resources and the virtuous circle of real estate construction funds. The real estate market can guide the rationalization of residents’ consumption structure, which is conducive to improving living conditions and improving residents’ living standards. Therefore, the real estate market is the most representative and most important part of the real estate market system and is in the main position.

Chinese market

The absolute amount of real estate enterprises’ sales in January-May is not very low. The sales data of most key housing enterprises still shows an increase compared with the same period of last year. However, in the 2014 full-year target, the completion ratio is very low. The developer was overly optimistic at the beginning of the year to estimate the overall market for 2014.

As of yesterday, a total of 13 A-share and H-share listed real estate enterprises such as Vanke, Evergrande, Greenland, Country Garden and Poly announced their sales performance in May. Due to the increase in promotion efforts and the effect of local rescue policies, the sales of key real estate enterprises in May have improved, but the overall sales target completion rate in January-May has generally declined. It is expected that the pressure on the shipment and de-entry of housing enterprises will increase sharply in the second half of the year, and the sales strategy of accompanying the market and accelerating the de-transformation will become the mainstream of the housing enterprises in response to the market.

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