The Second Growth Curve Of Shanghai'S Old Housing Enterprises With 59 Billion Heavy Positions

In a single urban renewal project, China Sea real estate set a new record.

On July 28th, Huangpu District of Shanghai was changed into Huangpu District. This is a super large urban complex, with a total investment of about 59 billion yuan, which is the largest investment in the old reform project of a single real estate enterprise in recent years.

Behind this huge project is China Shipping real estate, which has always liked to develop net land. It has also been deeply involved in the field of urban renewal and old reform. Besides Shanghai, China shipping has won many large-scale old renovation projects in other cities.

Super large projects test the financial strength and comprehensive operation ability of developers, so it is almost only the game of large real estate enterprises. In addition to China shipping, Vanke, China Resources, China Merchants, Evergrande and other real estate enterprises have also won many super large projects.

Developers are changing their access to large-scale projects in the future. A developer may be able to obtain 100 billion sales by only a dozen super large projects, and the operation business deposited can continuously contribute to the rent and other cash flow.

Yu Liang, chairman of the board of directors of Vanke, said that Vanke has spent a lot of energy on the large and complex projects represented by the old reform and Tod. If a breakthrough can be made, it will bring a new growth curve for the traditional development business.

And this has become the common pursuit of large real estate enterprises.

59 billion investment

According to the announcement, zhonghaixin has won the project of historical landscape protection and urban renewal located in 67-71 block, Jianguo East Road, Huangpu District. It is located close to Xintiandi business district on Huaihai Road, involving more than 8500 residents and planning an area of 368000 square meters.

This is not an ordinary old renovation project, but a complex community reconstruction including residential, commercial, landscape protection and historical preservation buildings, which requires high comprehensive ability of developers.

The state-owned enterprises and the state-owned enterprises jointly hold 98% of the shares in the project, and the state-owned enterprises and the state-owned development zone will jointly take up 98% of the shares of the project.

Due to its excellent location and huge plot, CNOOC will invest as much as 59 billion yuan into the project in the next six years. This is the largest single old renovation project in recent years.

Previously, the largest investment in the old renovation projects in Guangzhou and Shenzhen were: in June 2020, the old renovation project of xiajie village in new world, with an expected total investment of more than 20 billion yuan; and on February 13, 2020, the largest old reconstruction project in Shenzhen, the key renewal unit of Xinqiao east area of Xinqiao street, with a total investment of 58.58 billion yuan, is now publicly selecting market entities.

There are many factors such as a large amount of deposited funds, long payback period, and great difficulty in the old reform projects. Moreover, the huge volume and amount of Huangpu project will support the development of the project.

According to the financial report, in 2019, CNOOC leads the peers with a net profit of 41.6 billion yuan, and the financing cost is the lowest in the industry, which is 4.21%. At the same time, it also maintains abundant cash flow. At the end of the first quarter of 2020, the cash on hand of China shipping is 99.74 billion yuan, and the net loan ratio is only 39.4%, which is in the lowest range of 100 billion clubs.

According to the announcement of CSCEC, the parent company of CNOOC, the 59 billion investment in Huangpu project will come from its own funds, shareholder loans, bank development loans and reinvestment of sales proceeds.

Referring to the operation of the 55 billion Guangxin asset package of Vanke, seven strategic investors were introduced and 39 billion yuan was recovered. Will China Shipping introduce investors for joint development?

In this regard, Qi zejin, chief investment consultant of Aijian securities in Tianjin, said that China Shipping's financial market is stable and has the background of central enterprises. This time, it cooperates with state-owned enterprises in the development, so it is unlikely to introduce war investment in the short term.

Qi zejin predicted that the financing mode of China Shipping in the future will be mainly to issue low interest overseas bonds. "At present, the overseas interest rate is low, and it is very likely that China shipping will go to Hong Kong to issue bonds for financing."

The world of super large projects

In recent years, China Resources has contributed more than 10 billion yuan to the sales of the commercial complex of China Resources. In recent years, it has also contributed more than 10 billion yuan to the sales of the commercial complex of China Resources.

This super large complex project is a favorite project of developers and local governments. It has led to the development of urban economy, but also promoted the transformation of real estate enterprises from development to operation. After the first and second tier cities have gradually entered the stock age, such super large projects have become the common pursuit of developers.

The Huangpu project won by China shipping this time is similar to this. In fact, the company has accumulated experience in the development of super large projects for several years. In 2015, the two sides won the bid for the shantytowns reconstruction project of Hubei Province, with a total area of 2.85 billion square meters, which was jointly owned by China Construction and Construction Bureau of Jinghai, Hubei Province, in 2018, with a construction area of 970 million square meters in Hubei Province. The total investment of the project is 2.2 billion yuan and the construction area is about 346500 square meters.

More developers are also involved in such projects. According to the statistics of Kerui Research Center, Evergrande, rongchuang, jiazhaoye, Fuli and Shidai are all involved in the old renovation construction area of more than 40 million square meters, including many million square meters of projects.

In Yu Liang's view, the transformation is not to abandon real estate for another industry development, but to find a second growth curve on this basis, and to "find new practices and new growth points in traditional business". Among them, the old reform is a major direction.

Kerry also believes that with the ceiling of the real estate incremental market peaking, it has become the consensus of most real estate enterprises to seek new performance growth points through the old reform business. 61% of the top 50 real estate enterprises and 47% of the top 100 real estate enterprises have already set foot in the old reform business.

Jiazhaoye predicted in the white paper of real estate industry in 2019-2020 that the total market value of China's real estate has exceeded 300 trillion yuan, and the scale of urban renewal market will reach 10 trillion yuan.

To enter this market, developers must break through the way of resource acquisition, from simple bidding, auction and listing to cooperation with local government, which requires developers to have comprehensive urban operation ability.

In fact, in addition to the super large projects that can be obtained by urban renewal, several large real estate giants are acquiring super large project resources through industrial implantation. For example, country garden wants to be an intelligent robot and Technology Town, Evergrande uses new energy vehicles to build its factory area, and rongchuang and Wanda compete for cultural tourism projects. All of these can be favored by local governments.

For example, central enterprises like Shekou, China Resources Land and poly development can easily get large-scale projects through their parent company background and long-term regional operation ability.

In other words, in the future, the project acquisition of real estate enterprises in mainstream cities will be cooperation with the government instead of bidding, auction and listing. In such competition, the ability of urban area operation and asset management is more important than the development ability.

People close to China Sea believe that the future real estate market will be dominated by super large projects. Whoever can obtain more such projects will have stronger competitiveness.

From the perspective of sales, Yihan think tank points out that in the selection of plot area, in recent years, China Shipping real estate tends to choose the plot with a larger area. A single plot can be developed for multiple periods, and it has a great tendency to reserve granary projects.

From the perspective of operation, the physical space of super large projects is rich, which can provide more assets for developers to transform operation, contribute more rental income, and become the second growth curve. At present, Zhonghai is already the largest office building operator in China, and assets such as shopping centers and long-term apartments are gradually increasing.

By the end of 2019, the total area of commercial properties held and put into operation by CNOOC is 4.38 million square meters, with total revenue of 4.16 billion yuan, a year-on-year increase of 22%, which is in the forefront of the industry.

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