As the central city of central China, Wuhan has been the core city of many national real estate enterprises in the past few years. The first financial reporter found that among the top 20 real estate enterprises in China, the sales volume of Hubei Province accounts for 4% - 6% of the national sales volume. Even the relatively low proportion of rongchuang China (01918. HK) has made a series of large-scale sweeping replenishment in 2019, including Wuhan as a key strategic city.
An epidemic has pushed the key to postpone the sale of housing, which has also put private real estate enterprises suffering from cash flow shortage in the first place. In the short term, the real estate enterprises with large amount of money will also suffer from the trouble of capital chain because of the huge amount of money deposited here.
Although several respondents believe that the demand for just needs and improvement will only be late or absent, the urban fundamentals of Wuhan will not change. However, as the epidemic continues, it is almost the consensus of respondents that the performance of Housing enterprises in the first quarter will be affected, and March is regarded as the watershed of whether the performance in the first half of the year can be repaired.
In 2019, the land acquisition area and land transaction price of national real estate development enterprises decreased by 11.4% and 8.7% year-on-year, respectively. Wuhan still achieved the counter trend growth of various indicators of real estate development, such as the annual supply construction area, transaction construction area and transaction floor average price.
Taking the land transfer fee as an example, according to the data of China Index Research Institute and Central Plains Research Department of Hubei Province, Wuhan has continued to rise in recent years, recording more than 160 billion yuan in 2019, which is the third hot second tier city in China after Hangzhou and Suzhou. The number of housing sales units and sales area ranked the top three in China for 9 consecutive years.
The importance of Wuhan market can also be seen from the actions of major real estate enterprises.
Based on the data of several institutions in 2019, and referring to Keruis top 200 sales list of Chinese real estate enterprises in 2019, the proportion of sales of the top 20 real estate enterprises in China, Hubei Province, basically maintained between 4% and 6%. The lower proportion is rongchuang China, which is 1.72%; the higher proportion is country garden, poly development and Jindi group.
Although the sales volume of local real estate enterprises is lower than that of national real estate enterprises as a whole, the proportion of sales is relatively high. Among them, the local private real estate enterprises represented by Aoshan holding and Fuxing Huiyu account for more than 40% of the sales from the province. 2019 is also the year of Wuhan real estate market warming.
In 2019, rongchuang China sweeps up more than 10 plots in Wuhan in the form of a single or joint venture, costing more than 23.44 billion yuan.
Huaxia happiness won the land use rights of two plots of land in Wuhan with a base price of 11.6 billion yuan. This is the first new commercial office project of Huaxia happiness in 2019, and the first project of South headquarters in the secondary market, the proposed financial center. These two plots are close to Wuhan super elevation standard green space center.
Similarly, Midea real estate (03990. HK), which entered the Hubei market for the first time in 2019, spent more than 5 billion yuan to get land in Wuhan, is a rare pen.
It is more and more difficult for Beijing, Shanghai, Guangzhou and Shenzhen to acquire land. Strong second tier cities like Wuhan, Chengdu, Hangzhou and Chongqing can be said to be the place where the top 30 real estate enterprises must compete and the market they must hold. A person in charge of the central China region of a real estate enterprise said that whether real estate enterprises strive for scale or profit, Wuhan is regarded as a high-quality chess piece for the regional layout of real estate enterprises.
More than 60 top 100 real estate enterprises have settled in Wuhan. On the one hand, the difficulty of real estate enterprises getting land in Wuhan has increased; on the other hand, it has also promoted more real estate enterprises hoping to enter the central China market to sink into the suburbs of Wuhan, the surrounding areas of Wuhan and other cities in Hubei.
Looking forward to overturning in March
A number of real estate enterprises in Hubei Province told the first financial reporter that at present, the safety protection of employees has become a top priority, and the work to be stopped must be stopped. It is reported that Hubei is the first area where most real estate enterprises close the sales department.
At present, on the one hand, it is to ensure the personal safety of the companys employees, especially those in the epidemic area; on the other hand, it is to help the epidemic area through donations and donations as much as possible. Rongchuang, an insider in China, said.
In addition to donations, rent reduction and rent exemption for tenants, China Evergrande and other real estate enterprises have delayed the commencement date of employees again under the response of delayed rework in many provinces.
Real estate enterprises such as country garden, rongchuang China and green city holding are getting customers through online channels. However, it is generally believed in the industry that the difference between houses and other commodities is large, and offline purchase is the custom of customers. The conversion rate of online house sales is low, and the effect of house sales is not obvious. The sales of real estate enterprises are generally in a passive situation.
In addition to Vanke, Jindi group and Jinke (000656. SZ), the sales volume of the top 100 real estate enterprises in January 2020 recently announced by Kerui has achieved positive growth, and the overall sales growth rate has declined.
January and February have always been the off-season for the sales of real estate enterprises, and the sales in the first two months accounted for about 10% of the whole year. The suspension caused by the epidemic has the biggest impact on February, and the little Yangchun in March and April this year probably lost its share. A real estate salesman in South China said.
Cao Jingjing, director of China market research, also expressed similar views. Compared with the SARS period, the current GDP growth slows down, the driving force for the continued substantial growth of the industry market size is significantly weakened, and the fundamentals of the real estate market regulatory policy are more stringent. This epidemic will have a greater impact on the market.
Almost a number of respondents and industry insiders see March as a key point to change the sales situation in the first half of the year.
March is the traditional peak season in the first quarter, accounting for nearly half of the sales in the first quarter. If the outbreak does not end in March, it is estimated that sales will be difficult to repair in the first half of the year. According to a person from the board and Secretary Office of a real estate enterprise in Hubei Province, the company is also adjusting the corresponding business decisions according to the dynamic situation of the epidemic, and dynamically following up and assessing the impact of the epidemic on the companys performance.
Affected by the epidemic situation, many new problems come one after another. Bai Yanjun, general manager of the business department of Zhongzhi, pointed out that, for example, if the pace and time of the start-up of real estate enterprises are delayed, the delivery projects will also be delayed, which is almost an unavoidable problem for the whole industry. At the same time, how to realize the offline transformation of online storage customers is also the core problem that real estate enterprises need to overcome at present.
Further pressure on high debt real estate enterprises
By the end of 2019, the shortage of funds has been the primary problem that plagues the real estate industry. At present, the real estate enterprises with cash flow constraints have to face more brutal challenges in the capital chain.
According to the 2019h1 report data of Tianfeng real estate, the cash / short debt coverage ratio of 32 typical real estate enterprises is 72%, and the free cash flow / short debt is - 18%. Generally speaking, the short-term debt repayment ability of real estate enterprises is not strong.
Mr. Bai pointed out that if the epidemic continues, the short-term cash flow of private real estate enterprises will be significantly affected, followed by the fluctuation of stock price, the decline of housing completion and delivery area throughout the year, and the problem of equity pledge.
In addition, the financing and creation of big winners in Wuhan land market in 2019, as well as the enterprises such as Huaxia Xingfu and Midea real estate with large amount of land, which are hard to collect cash in the short term, will also pose a challenge to the short-term capital chain of regional companies. In the opinion of the insiders, in view of the psychological trauma caused by the epidemic to the local residents, the recovery of confidence in the real estate market in Wuhan and Hubei will be slower than that in other provinces and cities.
HUAFA said that due to the closure of offline sales offices, the industrys first quarter performance is expected to be affected, on the one hand, the company will see the progress of the epidemic; on the other hand, the company will take other ways to impact the epidemic after the follow-up resumption of work, such as push, promotion and cash collection.
In the medium and long term, several respondents are relatively optimistic about Hubei market including Wuhan.
In the long run, it still depends on urban fundamentals. Compared with Chongqing, Chengdu and other second tier cities, Wuhan, which has the same industrial foundation, has a large population base and a population of over one million college students. In recent years, the number of college students studying in Han has increased, and there is a strong demand for rigidity and improvement. HUAFA said that as long as the fundamentals of Wuhan remain unchanged, the needs of residents will only be postponed and will not disappear.
As a highly sensitive industry to the capital end and policy end, another ballast that can alleviate the concerns of real estate enterprises may be loose expectations in financial finance, real estate supervision and other aspects. For example, the central bank has invested 1.7 trillion yuan in liquidity in recent two days, which has also given some real estate enterprises more confidence. In the context of the current epidemic, some high turnover enterprises will also face relatively large capital problems. It is recommended that real estate enterprises actively respond to policies and make plans. Bai Yanjun continued. It is mixed that a few real estate enterprises, such as China Evergrande, rongchuang China, Longhu group, country garden, Xincheng holding, etc., have issued more than 10 billion US dollars of debt in the window period of January 2020. For example, China Evergrande, on the one hand, extended the listing period of a shares for one year; on the other hand, issued another US $6 billion of notes. This is waiting for the spread of the epidemic, spring to provide room for real estate enterprises to move. Source: First Financial Editor: Guo Chenqi, nbj9931
As a highly sensitive industry to the capital end and policy end, another ballast that can alleviate the concerns of real estate enterprises may be loose expectations in financial finance, real estate supervision and other aspects. For example, the central bank has invested 1.7 trillion yuan in liquidity in recent two days, which has also given some real estate enterprises more confidence.
In the context of the current epidemic, some high turnover enterprises will also face relatively large capital problems. It is recommended that real estate enterprises actively respond to policies and make plans. Bai Yanjun continued.