(Economic Observation) How will the exit of real estate by two central SOEs affect the property market?

China News Agency, Beijing, April 3 (Reporter Pang Wuji) Recently, two state-owned non-real estate central SOEs, China State Grid and China Aviation Group, announced their withdrawal from the real estate business. Non-real estate central enterprises are taking a big step forward in the task of "clearing" the real estate industry. This may mean that while the central enterprises are more focused on the main business and "thin and fit", the "players" in the real estate industry will continue to streamline, and the Chinese real estate market has entered a more rational and orderly development track.

According to the information released by the website of the Central Commission for Discipline Inspection, the State Grid recently stated in the report on the third round of the 19th Central Inspection and Reform Exhibition that it will adhere to the main responsibility of the power grid with a higher political position and make up its mind to withdraw from tradition. The manufacturing and real estate businesses resolutely completed the task of deepening the reform of collective enterprises on schedule.

At present, Luneng Group, a wholly-owned subsidiary, is one of the major platforms for State Grid's real estate business. The industry expects that as State Grid divestitures its real estate business, Luneng Group may usher in a reorganization or be integrated into another real estate company's central SOE.

On the same day, China Aviation Group also stated in the circular on the third round of the central inspection tour to clean up inefficient real estate and exit the real estate business. The group said that Chengdu Southwest Airlines Real Estate Development Co., Ltd. has withdrawn from the real estate business through transformation.

Central enterprises' concentrated exit from real estate business began 10 years ago. At that time, in the face of the state-owned enterprises' aggressive entry into the real estate industry, in 2010, the State-owned Assets Supervision and Administration Commission of the State Council of China officially issued a "clearance order", requiring 78 state-owned enterprises that do not rely on real estate to exit the real estate market.

In 2011, the State-owned Assets Supervision and Administration Commission of the State Council approved 5 state-owned enterprises to retain real estate business, and the number of central enterprises approved to engage in real estate business increased from 16 to 21.

However, with the overall integration of China Metallurgical Group into China Minmetals, AVIC Real Estate was merged by Poly Real Estate, Shenhua Group and China Guodian merged and reorganized. In addition to Luneng, among the 5 specially approved non-real estate major central SOEs, there are still larger There is not much left in the large-scale real estate business.

In January of this year, the State-owned Assets Supervision and Administration Commission of the State Council once again required state-owned enterprises to strictly control the direction of investment in their main businesses. In order to circumvent the requirements of main industry supervision, they must not engage in business such as commercial real estate stipulated in the negative list of investment projects of central enterprises through equity participation. This is regarded by the industry as a more severe "check-out order" for central enterprises.

As more and more central enterprises withdraw from the real estate business, the "threshold" for making money from real estate is also getting higher and higher.

Since the "housing reform" in 1998, China's real estate market has suddenly emerged. The high-margin "cake" of real estate has attracted a crazy influx of all types of capital. All walks of life want to make money from real estate. Every year, the number of newly established housing companies is huge and uneven, and the real estate industry is chaotic.

However, in recent years, with the continuous expansion of the industry scale, the “ceiling” of real estate development business has emerged, competition within the industry has intensified, and a large number of small and medium-sized housing enterprises have been eliminated. The era of explosive growth in the real estate industry that can only make money by "building a house" and "building a house" has passed, and the industry's gross profit margin has declined year by year.

Against this background, non-main real estate central SOEs exited in an orderly manner, or passed three major signals:

First, the withdrawal of non-main real estate central SOEs is consistent with the central government's policy orientation on the real estate market.

From "no housing and speculation" to "not using real estate as a means to stimulate the economy in the short term", even under the impact of the epidemic, the central government's thinking on regulating the real estate market has not changed, and its regulatory goal has always been to promote the stable and healthy real estate market. development of.

In recent years, many centrally-owned enterprises with strong financial resources have taken up land at high prices in the land market, which is also regarded as one of the driving forces for rising house prices. Setting higher thresholds for central enterprises to engage in the real estate industry will help promote a more rational and orderly market.

Second, the withdrawal of non-real estate main SOEs will urge them to focus more on their main businesses and innovation. In fact, after bidding farewell to high-speed growth, a considerable number of real estate companies have increased funding pressure due to poor sales and incorrect land acquisition decisions, and real estate has gradually become their inefficient assets. Exiting this part of the business can not only recover considerable cash flow, but also provide funding for its subsequent transformation and innovation research and development.

Third, there may be profound changes in the future development of the property market. The Chinese economy is undergoing transformation and upgrading, and its dependence on real estate will gradually decrease. The role of real estate in the macro economy will also shift from "engine" to "stabilizer". At the same time that some central enterprises exit the real estate business, it also means that the situation of excessive concentration of resources and funds in the real estate market will also change, and the development of the real estate market has entered a new stage. (Finish)