Real Estate Cooling EnterprisesPerformance Growth Slowed and Differentiation Accelerated in May

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 Real Estate Cooling EnterprisesPerformance Growth Slowed and Differentiation Accelerated in May


Influenced by the cooling of the market, the performance of real estate enterprises is fluctuating.

Recently, listed real estate companies have released May sales results, compared with the same period last year, sales growth slowdown and decline has become a common phenomenon. Among them, affected by the regulation and control of the real estate market, the overall market cooling has become an important reason.

Among the three first echelon housing enterprises, Vanke achieved 57.99 billion yuan in contract sales in May, and 267.6 billion yuan in contract sales in the previous May, up from the same period last year. Biguiyuans rights and interests contract sales amount in May was 54.33 billion yuan, a decrease of 4.88% compared with the same period last year. Hengda achieved sales of 53.53 billion yuan in May, up nearly 30% year-on-year, but the companys sales performance in the previous May was lower than that in the same period last year.

The performance of medium-sized Housing enterprises has been markedly differentiated. In the first May, some enterprises still maintained a growth scale of nearly 50%, but the decline in sales growth rate to single digits was more common. Jinmao, Greentown, Zhengrong and other enterprises showed negative sales growth.

It is an important background that the performance growth of Housing enterprises is hindered by the implementation of urban policies and the cooling of the market. Analysts believe that the one city one policy is the main trend of future regulatory policies. It is expected that the future market will be difficult to reverse, and the era of high-speed growth of housing enterprise performance will probably face an end.

Analysts believe that with the improvement of the monetization shed coming to an end and the market entering a downward cycle, it will be very difficult for the future sales of real estate industry to grow substantially. - Gan Jun

Sales growth slowed down

Compared with the same period last year, Vankes sales increased by 35% in May and 12.0% in May. The sales volume of Hengda in May was 231.54 billion yuan, down about 10% from the same period last year. Because of the difference of statistical caliber, it is difficult to judge the change of Biguiyuans sales in the previous May, but the companys sales declined in January.

Rongchuang has also witnessed low growth. In May 2019, Rongchuangs contract sales amounted to about 44.38 billion yuan, up 16% year-on-year and 13% annually. In the first May, Rongchuang realized contract sales amounting to 163.37 billion yuan, an increase of 12% over the previous year.

According to the data of Yijuke Errui, the overall sales performance of TOP 100 housing enterprises in January-May 2019 was nearly 3.5 trillion yuan, a slight increase of 4.1% compared with the same period last year. Compared with last years growth rate of more than 30%, the decline is obvious.

From a single month point of view, the sales scale of top 100 housing enterprises increased by 8.8% annually in May, only 5.7% year-on-year, down from 12.2% and 16.6% in March and April.

Due to the difference of enterprise strategy, land reserve and business layout, the performance of medium-sized Housing enterprises is obviously differentiated.

In the first May of this year, Zhongjuns contract sales amounted to 26.813 billion yuan, an increase of 55% over the previous year, and the contract sales area was 213.49 million square meters, an increase of 53% over the previous year. The sales volume of construction real estate in May was 2589 million yuan, an increase of 46.8% year on year. Shimao achieved 71.9 billion yuan in sales, an increase of 39%. Ocean-going, Xuhui and Jindi also achieved growth of more than 30%.

In contrast, the annual growth rate of Fuli and Fancy has dropped to single digits, while Jinmao and Greentown have also experienced negative growth. In the first May of this year, the contract sales area of Greentown Group was about 2.91 million square meters, and the total contract sales amount was about 55.3 billion yuan, down by 9.62% and 5.79% respectively.

The phenomenon of slowing down the growth rate of head housing enterprises and differentiating the performance of medium-sized Housing enterprises has emerged since last year. A person in charge of a large-scale housing enterprise in Beijing told the 21st century economic report that the annual sales scale of large-scale housing enterprises has exceeded the threshold of 600 billion yuan, and will impact hundreds of billions of dollars. It will be the focus of this stage to stabilize the sales scale and optimize management.

In contrast, medium-sized Housing enterprises will still pursue breakthroughs in scale at this stage, limited to various subjective and objective conditions, the growth rate of such enterprises is different, but enterprises often open the gap at this stage.

Lack of market warming

The slowdown in sales growth of Housing enterprises is closely related to the changes in the general environment of the property market. According to the statistics of the Central Plains Real Estate Research Center, in May and January, the central ministries and local governments issued 41 real estate control measures. Although less than 60 times in April, it has been in the midst of intensive releases for two consecutive months.

Shanghai Yiju Research Institute pointed out that with the emergence of Xiaoyangchun in some hot cities and frequent regulation of the real estate market in May, both housing enterprises and buyers have tightened their finances. Banking and Insurance Regulatory Bureau around the country issued fines for illegal lending to real estate, and the interest rate of first house loans in some second and third-tier cities such as Nanjing increased. In addition, the Ministry of Housing and Construction warned four cities such as Suzhou that house prices rose too much. One city, one policy is coming out in some hot cities.

Affected by this, the real estate market of key cities did cool down in May, and the turnover entered the downward channel again, but the market of all cities continued to differentiate. Specifically, the market demand of the first-tier cities is still strong, most of the second-tier and third-tier cities have markedly cooled down, and the turnover has fallen to varying degrees.

Take Suzhou as an example, on May 11 and 16, the regulation and control measures of the real estate market were introduced continuously. On May 24, the Suzhou municipal government held a symposium on major developers, and delivered a number of messages, including the annual price increase must be controlled within 5%; the pre-sale record price of all projects must not exceed 40,000; the land transfer guidance price will be reduced appropriately, and so on.

Since then, the transaction volume and price of Suzhou real estate market have declined to a certain extent, and the wait-and-see mood in the market began to increase.

Zhang Dawei, chief analyst of Zhongyuan Real Estate, believes that there are abundant regulatory means available in various places, and long-term mechanisms such as early warning mechanism have begun to operate, so it is not difficult to cool the property market quickly. At the same time, on the whole, the mood of the current buyers is more rational, panic buying behavior has not occurred in a large area.

Zhang Dawei said that although housing companies are likely to increase their supply sprint in June, sales will still be under great pressure in the traditional off-season of June-August.

According to the statistics of CITIC Construction and Investment, from June 1 to 7, the turnover area of new houses in key cities decreased by 4.00% year-on-year, from positive to negative, and by 25.42% year-on-year. Among them, the first-tier cities decreased by 32.20%, the second-tier and third-tier cities decreased by 12.22% and 36.54% respectively. During the Dragon Boat Festival holidays, trading data was also generally depressed.

Analysts believe that with the improvement of the monetization shed coming to an end and the market entering a downward cycle, it will be very difficult for the future sales of real estate industry to grow substantially. Everbright Securities forecasts that in 2019, the sales of newly built commercial housing in China will be about 12.7 trillion yuan, which is the same as the previous year; the sales area will be about 1.37 billion square meters, down 7.3% from the same period last year. Among them, sales growth will bottom in the third quarter of this year.

Source: Responsible Editor of 21st Century Economic Report: Li Wan_B11284