All the real estate companies that are facing a crisis are all companies that have performed more aggressively under the model of high leverage, high debt and high risk.

Farewell to the old "three highs", the "new three highs" that the real estate industry should pursue after entering a period of steady development is "high quality, high quality and high efficiency".

  The annual report season is approaching, and most listed real estate companies have released their 2021 annual reports one after another.

As we all know, the real estate industry in 2021 has experienced unprecedented challenges, such as difficult sales, financing, and repayment.

From the annual reports of many real estate companies, I not only read the difficult current situation of the industry, but also read the urgency of industry enterprises to transform and explore new development models.

  The "no-show" in the annual reports of individual real estate companies reflects the difficulties of business operations.

March 31 is the deadline for most Hong Kong-listed housing companies to disclose their annual reports. Some Hong Kong-listed housing companies have been suspended for failing to disclose their annual reports as scheduled, including well-known companies such as Sunac China.

The failure to release annual reports as scheduled, leading to the suspension of stock trading, has the potential to deepen investor concerns about the weak corporate governance, financial management, financial planning, transparency, disclosure, financial and liquidity positions of these companies.

Delayed disclosure may further affect its credit rating and make financing more difficult.

From the explanations of various companies, the impact of the epidemic is a more common reason, and some companies have changed their auditors before publishing their annual reports.

Almost all of these companies that fail to disclose their annual reports on time face liquidity difficulties to varying degrees.

In general, the failure to make an appointment in the annual report reflects the difficulties faced by companies and the industry to a certain extent.

  Many companies experienced a drop in net profit.

In the past few days, the chairman of Vanke's board of directors has attracted attention because of the 45.7% year-on-year drop in net profit in 2021.

Some companies, including Vanke, have seen their profits slump even though their operating income is still increasing.

For example, the operating income of China Overseas Properties increased by 30.4% year-on-year, while the profit attributable to shareholders decreased by about 8.5% year-on-year.

This situation did not happen only this year. It has become a common situation faced by many enterprises in recent years.

  There are differences and differentiations among different companies.

Some real estate companies, including individual head companies, are in debt crisis and are still being resolved.

Some companies' operating income and profits both declined.

However, there are still companies that perform well, such as China Jinmao's 2021 profit attributable to shareholders, which will increase by 49% year-on-year.

Net profit attributable to shareholders of Longfor Group increased by 20.1% year-on-year.

  Overall, 2021 is a year of overall downturn in the real estate industry.

What is the reason?

Vanke Group attributed the decline in its own profits to two aspects: the large dispersion of management and the high cost of multi-track exploration.

Vanke said: "Although we realized early on that high-speed growth will eventually come to an end, we failed to resolutely get rid of the inertia of high-growth. When the pursuit of scale is still popular and the competition for land is intensified, there are still some cities where investment is chasing high and aggressive, and investment in some projects. Expectations didn't materialize." Chasing high is a common phenomenon.

All the real estate companies that are facing a crisis are all companies that have performed more aggressively under the model of high leverage, high debt and high risk.

The "three highs" model is unsustainable, and should be the most powerful conclusion that real estate companies have come to after experiencing the downward pressure on the industry in 2021.

  For the real estate industry, the most important thing right now is stabilization.

A number of competent authorities have spoken out one after another, and various places have adopted policies based on the city, all of which have released positive signals to stabilize the property market.

More importantly, the transformation of the real estate industry is imminent.

Exploring a new development model is not only a requirement of relevant documents and meetings of the central government, but also a necessary stage for the development of the real estate industry to this day.

Exploring a new development model is undoubtedly easier said than done, which is reflected in Vanke's claim that the high cost of multi-track exploration has had an impact on operating profits.

However, it is difficult to gain the upper hand without taking an early exploratory step.

One example is that Longfor Group’s long-term rental apartment business finally made money after a few years of development. In 2021, Guanyu has opened more than 100,000 apartments and began to achieve profitability.

The current result comes from the decisions and efforts made a few years ago; the harvest a few years later comes from the decisions made today.

  In the real estate industry, which has entered a new stage of development, long-term cycles and slow making of money may become the norm in the future.

In the track other than real estate development, whether it is commerce, logistics, leasing, or urban renewal, most of them have the characteristics of high initial investment and slow profit.

The new development model is not necessarily a simple track switch, but may also include changes in business models, business logic, and even reshaping of corporate culture and values.

  It can be seen from the annual report briefings of some listed real estate companies that despite facing a situation that is completely different from the previous high-speed growth stage, the companies are still full of confidence in the real estate industry.

Industry insiders believe that the total scale of the real estate market in the future will hardly reach a new high, but it is still a huge market with a value of more than 10 trillion yuan, which is often done and often new.

And people's demand and yearning for a better living life have always existed, so the real estate industry can still be regarded as a "sustainable industry".

Farewell to the old "three highs", the "new three highs" that the real estate industry should pursue after entering a period of steady development is "high quality, high quality and high efficiency".

  Whether it can embark on a connotative high-quality development path, the real estate industry, which is in the process of in-depth adjustment, must look for opportunities in the challenges.

  Kang Shu

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