Sino-Singapore Jingwei Client, January 1st (Meng Zhang) In 2020, the epidemic will impact the entire real estate industry. The regulation of the real estate market in various places continues, the financing environment continues to tighten, the competition among real estate companies has intensified, and small and medium real estate companies are under pressure.

Data map: construction site of a real estate project.

Photo by Zhang Meng, China-Singapore Jingwei

Multiple factors

Over 470 real estate companies went bankrupt

　　According to the People's Court Announcement Network, the number of real estate companies going bankrupt in 2020 will exceed 470.

　　Zhao Xiuchi, vice president and secretary-general of the Beijing Real Estate Law Society and professor of Capital University of Economics and Business, pointed out in an interview with China-Singapore Jingwei that the survival of the fittest is the law of the market, and the bankruptcy of real estate enterprises is also the general law of the market economy.

Under the market economy, there are always some companies that cannot withstand the risks of the market, policies, and epidemics, and will be eliminated.

　　Chen Xiao, an analyst at Zhuge looking for real estate, told a reporter from Sino-Singapore Jingwei that under the impact of this year’s epidemic, real estate companies’ sales collections were blocked, capital chains were under pressure, and financing supervision was gradually tightened in the second half of the year. The promulgation of regulations has further increased the capital chain risk of small and medium-sized real estate companies with poor financial status and insufficient cash flow.

　　Yan Yuejin, research director of the Think Tank Center of E-House Research Institute, pointed out that the bankruptcy of real estate companies occurs every year. In terms of market development, it is normal for some companies to go bankrupt.

　　Speaking of how to solve the problem of bankruptcy of real estate companies, Chen Xiao pointed out that first of all, we need to pay close attention to the debt situation of small and medium-sized real estate companies, assess the risk index, and gain insight into corporate risks in advance.

At the same time, it is necessary to balance the relationship between cash flow and development expansion to achieve high-quality development.

In addition, strengthen the attention and research on the industry and policies, and actively carry out strategic review.

　　Zhao Xiuchi pointed out that in order to avoid bankruptcy, real estate companies must review the situation, constantly adjust their strategic layout, and constantly introduce new ones to make their products marketable and meet the needs of the people, and provide corresponding products from the perspective of demand.

From the government's perspective, we should try our best to provide certain financing, tax reduction and exemption policies for enterprises facing bankruptcy risks, encourage reorganization and mergers, etc., to help them tide over the difficulties.

　　Crane Real Estate Research Center pointed out that under the current competitive landscape, the growth rate of leading real estate companies has slowed down, the growth space of small and medium-sized real estate companies has further restricted, and the pressure of scale competition has increased.

At the same time, under the requirements of the "three red lines", the future high-leverage and high-liability operation model cannot be sustained.

　　In Yan Yuejin's view, real estate enterprises' finances must be properly controlled, and at the same time, supervisors must strengthen financial supervision.

New Jingwei photo by Xiong Jiali in the data map

Bond financing breaks records

Expert: "Three Red Lines" Will Not Relax

　　In the first November of 2020, the national real estate development investment was 12,299.2 billion yuan, a year-on-year increase of 6.8%.

The funds in place for real estate development enterprises were 17,109.9 billion yuan, a year-on-year increase of 6.6%.

　　Statistics from Centaline Real Estate Research Center show that as of December 30, 2020, real estate companies issued bonds to raise as much as 711.589 billion yuan, a 25% increase from the 569.429 billion in 2019, setting a new record.

In terms of land transactions, the four cities of Shanghai, Hangzhou, Guangzhou, and Nanjing had over 200 billion land transactions, and 13 cities including Beijing and Wuhan had over 100 billion land transactions, all setting historical records.

　　Data from the Zhuge Housing Search Data Research Center also shows that as of December 25, 2020, the land transfer of 300 cities nationwide was 5,460.3 billion yuan, an increase of 12.1% over the entire year of 2019.

　　Economist Ma Guangyuan predicted that the real estate data in 2021 will still reach new highs, especially the real estate development investment and sales data will not be lower than 2020.

At the same time, the financial environment of the real estate industry is still severe, and the "three red lines" will not relax.

　　Liu Wei, deputy director of the Special Assets Research Center of the National Finance and Development Laboratory of the Chinese Academy of Social Sciences, said that my country's real estate companies are currently facing the dual pressure of ensuring cash flow and reducing debt. Promoting sales and reducing costs have become key tasks for real estate companies.

　　Chen Xiao predicts that with the tightening of financing supervision in the future, it is not ruled out that more real estate companies will go bankrupt due to their capital failure.

　　Zhao Xiuchi believes that whether more real estate companies will go bankrupt in 2021 will depend on the real estate market and macroeconomic trends.

As the property market and the macroeconomic situation improve next year, there will not necessarily be more real estate companies going bankrupt.

(Zhongxin Jingwei APP)

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