Su Xin: The Core Of Making Money In Commercial Real Estate Is Operation And Asset Management.

April 21st morning, 2011 city views forum Wuhan will start the Shangri-la Hotel Wuhan in Wuhan.

Meng Xiaosu, chairman of China real estate group. build Wang Juelin, deputy director of the ministry policy research center, former SOHO Deputy CEO Present high and Investment Chairman Su Xin and more than ten governments. enterprise , Finance People immediately focus on the theme of "pattern creation" in the current urgent form. discuss 。

　　 The following is a speech by Su Xin, former vice president of SOHO and chairman of investment and Investment:

Do we want to invest in real estate? How do we make money? What is the commercial real estate in the end? The heat of commercial real estate is self-evident. I believe we have already felt in Wuhan. Last year was the first year of the economy. Besides housing, there are commercial real estate. We all have to vote. Is commercial real estate our refuge or gold rush? This topic should be carefully digested for every developer. There is no way to compare the scale of commercial real estate with that of residential buildings, and we have already seen some risks in the requirements of commercial real estate.

Risk 1, perceived risk. Commercial real estate does not make money when it is built. It needs good management to make money.

Risk 2: two or three line cities commercial real estate in the short supply is very large, the local government to two or three line city planning rigidity is relatively low. For everyone, if the commercial real estate is properly treated, I suggest that you should act as a short-term refuge. The future risk of commercial real estate is relatively large. Whether we can get the money or how well our management is doing is a problem before us. So the first problem of commercial real estate is where our money comes from.

　　 The commercial real estate that we can see now has three exports after it has been built.

First, REITS.

Second, insurance funds.

Third, safety capital.

Those three exports should be sold to the commercial real estate that we build. The origin of REITS was in the US in 60s, when there was a downturn in economy and bad commercial real estate. In the first five or six years, the development was very bad. Later, the government found that a certain amount of tax incentives should be given, because the government found that many insurance funds need to increase value without stable investment channels. Can REITS be formed? Why did we not talk about REITS in mainland China for five or six years? What's the reason? In fact, many people regard it as a way to finance developers. We have to control developers and not give him money. How can we give them financing channels? In fact, we can change the train of thought that a lot of money in society does not have much investment channels. Real estate develops with the rapid development of China and the process of urbanization. Can the money of ordinary people enjoy a certain increment with the development of real estate? If there is such a train of thought, REITS will come out, but at the moment, it is not optimistic. The time is longer than we expected.

Last year, a new insurance law was introduced. A friend calculated the amount of money. By the end of last year, the industry's total income was four trillion, and 10% of its investment in commercial real estate was four hundred billion. He thought that about seventy billion of the money could be invested in commercial real estate. I believe that most of the money was still in the first tier cities, because their demand for return was around 60%. This return, I believe everyone here is unwilling to sell him, equivalent to twenty percent off to thirty percent off of the price of real estate. And insurance investment preference is more stable, so they prefer to choose 5A office buildings that have been operating very well, or those with better management.

We are preparing to publish a white paper on private capital in Boao forum in August. We have chosen four regions to study private capital. We can know how big the amount of private capital is. The resident population of Ordos is 400 thousand, the population of this region is 600 thousand, the conservative estimate of assets is over seven thousand, and there are twenty thousand people with assets amounting to 100 billion. We know that there is a lot of money in society. There is a kind of money that seeks stable returns. If commercial real estate is not intended for short-term speculation, it is hoped that returns will be stable, so they are more willing to choose commercial real estate.

What is commercial real estate making? Can we make money if we build it? Of course not, the core of commercial real estate making money is to have operational ability, and also include the ability of asset management. These two capabilities can make the value of commercial real estate continue to improve. The value of commercial real estate is determined by rent. What determines the level of rent? Determined by operational capability. So commercial real estate is not that we simply think that as long as lots of good prices can be high. We imagine that each step below corresponds to a pool of funds, the first level is short-term investors, the second level is the medium term investors, the third tier is the long-term investors, and their capital preferences are different. Short term investor preference is high yield and high risk. Long term investors prefer low income and low risk. We imagine that when there is a real estate on the first step, how can we make money? We must buy them short term commercial real estate. We try to transfer commercial real estate to second steps, third steps, and every step. Because they have different risk preferences, they can get more money. The key is how to make real estate from the first step to the second step, and then go up. The United States is now a large number of existing commercial real estate transactions, which is the ability to make money, asset management capabilities, through service providers to improve their management and operational capabilities, thereby enhancing the value of commercial real estate, so that short-term investors can hold the commercial property sold to long-term investors. When we leave these two abilities, we earn the same price as selling houses, which is based on the appreciation of land cost. Will the commercial real estate fund recognize his exports? In the short term, it is very difficult. If REITS can not be their main financing channel, private capital must be more concerned. We need to provide services for rent, property management and capital asset reflow.

According to the discussion of the preceding three topics, the commercial real estate fund must solve the above three problems first, consider where the money comes from, and secondly, consider whether the fund that you cooperate with has commercial operation ability, and once again consider whether a good export can be found after the project is completed. We firmly believe that private capital must be an important export of commercial real estate, but the requirements for our employees are very high and we need to solve many problems. Asset management problems, customer management problems, investor management problems. If we want to make money, the most important thing for our investors is our own team's asset management and business operation capabilities. Thank you!