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Characteristics and Analysis of Real Estate Developers' Capital Operation
First, the characteristics of capital flow of real estate development enterprises
The main capital flow before land acquisition: land evaluation fee, land bid bond, etc. At this stage, funds are in a state of net outflow, and the main source of funds is self-owned capital.
The main capital flow during land acquisition: land payment, taxes and fees, etc. This stage is short, but the outflow of funds is large, and the source of funds is mainly self-owned capital.
The main capital flow in the early stage of project development: the expenses during this period mainly include project planning and positioning fees, project design fees, project investigation fees and fees charged by various government departments. At this stage, the scale of capital outflow accounts for a small proportion of project investment, but the capital planning in this period is very important, and it is necessary to effectively complete the financing arrangement of the project. The main source of funds is self-owned funds.
The main capital flow during the development and construction period: mainly for civil engineering costs, decoration costs, infrastructure costs, public facilities costs, development management fees, etc. The fund demand of the project is mainly provided by the financing arrangement in the early stage of development.
Main capital flow during project sales or lease: this period is the revenue generation period, and the expenses mainly include project promotion expenses and project agency expenses.
Among the above links, the first four links are capital outflow period, and the main sources of funds are self-raised funds of the project, bank loans and part of sales funds. Among them, land payment and construction cost are the core capital outflows during this period. The former happened in a short time, while the latter was spent in succession during the whole project construction period. The period of sale or lease is the only link with the recovery of funds. The capital inflow of sales-oriented properties generally shows the characteristics of large at first and then small, that is, in the early stage of sale, the capital returns quickly, and in the late stage of sale, the capital inflow slows down and eventually returns to zero; However, the leased property shows that the initial capital recovery is less, and then the capital recovery increases steadily as the operation enters a stable period.
Second, the key to fund management of real estate development enterprises
Generally speaking, according to the production process, fund management can be composed of several key points, such as investment plan, fund plan, fund raising and fund utilization, and real estate enterprises are no exception.
1. Investment plan is the premise of fund management.
Real estate enterprises have the characteristics of huge capital demand and long capital turnover cycle. Once there is a shortage of cash flow, it will seriously affect the progress of the project and may lead to the unfinished project. Therefore, on the basis of sufficient self-owned funds and a virtuous circle of cash assets, it is a prerequisite for real estate enterprises to formulate strict investment plans to ensure cash flow and investment ability.
2. Capital plan is the basis of capital management.
Judging from the process of project development, all the fund planning arrangements of the project should be completed in the evaluation stage before obtaining the project. The evaluation results at this stage will directly affect whether to invest in the project, and in order to complete the work at this stage more accurately, the development enterprise must make reasonable and detailed predictions on the project positioning, design, construction scheme, project financing and project sales plan, and any deviation in the work will have an impact on the subsequent use and withdrawal of funds. Therefore, the more accurate and informative the assessment is, the closer the fund plan will be to the actual fund demand in the future, and the smaller the financial risk the enterprise will face.
3. Fund raising is the key to fund management.
For real estate development enterprises with huge capital demand, financing ability is undoubtedly related to the lifeblood of enterprise development. The endogenous funds of enterprises are limited by the accumulation of enterprises, so it is difficult to increase on a large scale in a short time; After the financial crisis, traditional development loans became increasingly unreliable. The ups and downs of the market have increased the difficulty for development enterprises to accurately predict the future capital recovery; In this case, it is undoubtedly necessary for enterprises to expand financing channels.
Following the capital plan of the enterprise, contacting the funders as soon as possible, listening to their ideas and suggestions on the project, and integrating them into the project will help the enterprise to obtain financing more conveniently.
For real estate development enterprises, this stage is undoubtedly the focus of the whole fund management process, and financing management is precisely the core of this stage. At present, for development enterprises, bank development loans are still the most important means of financing. However, the control of bank credit in China is quite frequent and extremely unstable. In order to avoid the passive mode of "depending on the weather", as a real estate development enterprise, it is undoubtedly a long-term task to continuously improve the lending capacity and broaden the financing channels. In today's diversified economic development, financing channels tend to be diversified. In the current economic environment, the following channels can also be used for reference:
Financing mode
explain
trait
difficulty
Internal financing of enterprises
Advance payment is obtained through mortgage, pledge, bill discount and enhanced sales, and funds are obtained by using retained earnings.
Strong availability and limited capital scale.
low
Seek financing through listing in the stock market
Issue shares in the open market or go public indirectly by buying shell companies.
Time-consuming and difficult to approve
high
Bond financing
The act of raising funds from the market by issuing corporate bonds or corporate bonds.
Usually, the financing period is longer and the financing cost is lower.
high
Operating property loan
Loans with self-operated properties as collateral and operating income or rental income as the main source of repayment.
The credit of the developer and the operating income of the property are required to be high and the term is long.
middle
Merger and acquisition loan
Loans issued by commercial banks to acquirers or their subsidiaries to pay the transaction price of M&A.
It has high requirements for enterprise qualification and long cycle.
high
Trust financing
Financing behavior of raising trust products from the public.
There are higher requirements for corporate credit.
middle
entrusted loan
A loan business in which a client provides funds from a legal source and entrusts a bank or trust institution to issue, supervise the use and assist in recovery on behalf of the client according to the loan object, purpose, amount, term and interest rate determined by the client.
Short-term and high cost
middle
investment fund
That is, it is a financing behavior to obtain project funds through cooperation with domestic and foreign investment funds, whether it is equity cooperation or bond cooperation.
High cost
middle
Leaseback
Sell the self-made or outsourced assets and then rent them to the buyer for use, thus obtaining cash flow.
On the premise of retaining the right to use assets, make the asset owner obtain the required funds; High financing ratio
low
Repurchase financing
The property owner sells the property to a financial institution, and then buys back the property from the same financial institution through mortgage.
High financing ratio
middle
RealEstateInvestmentTrust (realestateinvestment trust)
An investment form that operates in the form of a company or a trust (contract) fund, applies the raised funds to real estate transaction management or mortgage investment, and distributes the proceeds to shareholders or investors.
Professional management
high
4. The use of funds is the guarantee of fund management.
The use of funds refers to how to put the raised funds into various purposes in the process of project development. In order to strictly control the direction of the use of funds, it is necessary to prepare a comprehensive income budget and expenditure budget in advance, strengthen the awareness of budget constraints, and strictly audit the over-expenditure projects. Strengthen the awareness of cost management, and reduce the development cost of the project as much as possible on the premise of ensuring quality and time limit.
Third, the core of fund management of real estate development enterprises
From the perspective of enterprise strategy, the core problems to be solved in enterprise fund management are: fund distribution, fund efficiency and fund security.
1, allocation of funds
Capital allocation is a broad concept of capital utilization, and it is a kind of capital utilization rule that combines long-term investment strategy and short-term investment strategy of enterprises. Real estate development enterprises need to make their own fund allocation plans according to their own development strategies.
Specifically, enterprises need to consider how many cash assets to allocate to ensure the normal operation of projects, how many land assets to carry out future development, how many projects under construction to ensure the continuity of sales, and how many property projects for sale to withdraw funds in time, so as to achieve a balance of funds.
Real estate enterprises should rationally allocate funds of different assets, determine the reasonable amount of cash to repay debts due, and determine the reasonable amount of land reserves, while avoiding investment beyond the capacity of enterprises and controlling risks.
2. Efficiency of funds
Real estate enterprises occupy a huge amount of funds, and the low efficiency of funds will greatly increase the financial expenses of enterprises, thus affecting the income of enterprises. First of all, enterprises need to ensure that they have enough funds to meet normal business needs; Secondly, by increasing the inflow of funds and controlling the outflow of funds, the balance of funds can be achieved.
From the perspective of capital expenditure, the items that affect expenditure mainly include product design, building materials selection, construction management expenses, financial expenses and marketing expenses. Accordingly, development enterprises can establish and improve the modern supply chain management system by improving product design and reasonably selecting building materials. At the same time, they can control all management expenses as much as possible, improve their negotiation ability with financial institutions, and achieve the purpose of reducing expenses and improving capital efficiency.
From the perspective of capital inflow, shortening the payback period is undoubtedly the best way to improve capital efficiency. Specific measures include reducing land idle period and improving project preparation efficiency; On the premise of ensuring the quality of the project, speed up the construction progress; Make a reasonable marketing plan, sell quickly, and realize the rapid withdrawal of funds.
3. Capital security
Any enterprise, capital safety management is the key link of financial management, and real estate enterprises are no exception. Generally speaking, the safety management of funds can be achieved by establishing and perfecting the fund restraint mechanism and supervision mechanism.
First of all, through the establishment of a restraint mechanism for the use of funds, reduce the illegal use of funds. Generally speaking, enterprises can realize the constraint of fund management by establishing the system of examination and approval authorization, strict reimbursement management, establishing the system of separation of incompatible posts and strengthening the implementation of the responsibility system of fund management.
Only the restraint mechanism can not completely guarantee the safety of funds, and a sound fund supervision mechanism is the key to prevent risks. Enterprises can regularly and irregularly check the actual implementation of various restraint mechanisms, regularly check physical assets, monitor the flow of each important fund, conduct comprehensive inspections on a regular basis, and improve the internal audit system, thus reducing the risk of funds.
Fourth, the investment of real estate development enterprises is too impulsive, which may lead to the recurrence of financial pressure.
To sum up, since 2009, affected by the recovery of the real estate market and the loose monetary policy, real estate development enterprises have once again become the darling of banks, resulting in a large amount of credit funds flowing into the real estate market, thus alleviating the pressure of self-financing of enterprises. At present, because the market is generally worried that too much credit funds will flow into the real estate market, resulting in a real estate bubble, banks have recently strictly implemented the credit approval standards for second-home transactions, and large-scale new credit in the first half of the year will also limit banks' lending in the second half of the year. It is expected that bank credit will tighten the real estate industry in the third and fourth quarters.
In the absence of sufficient credit support, it is expected that the market transaction volume will drop significantly and the price will stabilize. Since the second quarter of this year, land transactions have reappeared, and future development enterprises will once again face the problem of paying land transfer fees. Therefore, the excessive expansion during the market boom is likely to lead to the pressure of capital shortage for development enterprises again. Under the background and expectation of intensive policy regulation and frequent market fluctuations, it will undoubtedly be a long-term task to see the essence of fund management and strengthen the fund operation management of real estate development enterprises.
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