China News Service, Beijing, March 29 (Reporter Pang Wuji) The transformation and development of China's real estate industry is accelerating, and one of its manifestations is that real estate companies are no longer "fighting for scale."
Since late March, China's listed real estate companies have intensively released 2023 performance reports and held performance conferences. The reporter observed that at the performance conferences of major real estate companies this year, "cash flow security" replaced "growth" and "scale" as high-frequency words.
Many real estate companies have prioritized cash flow security. Yu Liang, chairman of Vanke's board of directors, said at the results conference on the 29th that cash flow security is the top priority. Vanke's management team is determined not to lie flat. The company will intensify its efforts to revitalize existing assets, real estate changes, and other tasks to ensure a thicker safety cushion. Midea Real Estate also stated that its strategy in 2024 is to first ensure the safety of cash flow and expand its scale later.
Rapidly expanding the scale of enterprises by increasing debt was once the "golden key" to the development of Chinese real estate companies. However, as the industry adjusts and rebalances, this model is clearly unsustainable. Many real estate companies have taken the initiative to reduce their debt scale.
Vanke proposed to reduce interest-paying debt by more than 100 billion yuan (RMB, the same below) in the next two years. Guo Guanghui, vice president of China Overseas Development, said the company places cash flow management as a top priority. In 2023, it will achieve operating net cash inflow of 35.28 billion yuan and repay a large amount in advance.
There are also companies that have made it clear that “investment is based on sales” and no longer blindly pursue high prices when acquiring land. Guo Jiafeng, CEO of Greentown China, said that cash flow is the company's top priority. In principle, the total amount of land acquired will be adjusted based on the company's cash flow situation, and the investment will be fixed based on sales. The management of China Resources Land also stated that it adheres to living within its means, regards cash flow safety as the first principle, and maintains a certain investment intensity. China Merchants Shekou emphasizes the implementation of "sales determine investment" and "sales determine production", and calculates the start of construction and land acquisition in the next quarter based on weekly, monthly, and quarterly cash flow.
Since last year, most real estate companies have started exploring new development models. As a traditional asset-heavy industry, many real estate companies are starting to go "light". Li Xin, chairman of the board of directors of China Resources Land, revealed that China Resources has made substantial adjustments to its operating real estate business on the basis of its original main channel business and turned it into an operating real estate asset management business. It hopes to build asset management into the second branch of China Resources Land. growth curve.
In response to the problems of operating businesses with heavy assets and long investment recovery cycles, Vanke believes that the development of REITs (real estate investment trust funds) may be the answer. The company revealed that it is expected to become the only company in the industry to achieve breakthroughs in three operating REITs. Previously, CICC SCPG REIT released by Vanke's SCPG has entered the inquiry stage, Wanwei Logistics REIT has been officially released on the exchange, and long-term rental apartment REIT is currently being declared.
China Overseas Land & Investment has proposed a goal of achieving a 25% growth in commercial revenue by 2024. According to reports, the company’s commercial projects exported by young asset management in 2023 accounted for 17% of the overall business scale.
Regarding the current real estate market situation, the management of many real estate companies said that positive factors are increasing in the market. Yan Jianguo, Chairman of the Board of Directors of China Overseas Land & Investment, believes that the real estate market is still in the transition period between the first and second halves. The transition period takes a certain amount of time and will inevitably experience fluctuations and adjustments. At the macro level, the long-term positive trend of China's economy has not changed, and the factors for recovery have strengthened. At the mid-level level, overly strict control policies are gradually being withdrawn, financial support continues to increase, and the government has stepped up efforts to promote the construction of affordable housing, the construction of "both leisure and emergency" public infrastructure, and the transformation of urban villages. ", helping to boost market confidence.
Yu Liang said that housing demand needs to be viewed dynamically, and the future space is still broad. On the one hand, there is room for improvement in various parts of China in terms of per capita living area, housing facilities, and community environment. On the other hand, the urbanization process is not over and the demand for new housing still exists. Taken together, the core value of residential construction in the future may be around 1 billion square meters. He believes that as the intensity of the policy continues to increase and its effects are gradually reflected, he believes that the market will gradually recover. (over)