Guangzhou's new policy of "changing business to living" landed

In view of the high stock of commercial services in recent years, is it a challenge or an opportunity for Guangzhou to launch a new policy of "changing business to living"?

Recently, the Guangzhou Municipal Bureau of Planning and Natural Resources and the Guangzhou Municipal Bureau of Housing and Urban-Rural Development issued the Guiding Opinions on the Renovation of Commercial Office Rental Housing in Guangzhou (hereinafter referred to as the Opinions).

The "Opinions" pointed out that non-residential stock houses such as commercial and business office buildings that have been built, have gone through the procedures for paid land use or have been initially registered will be converted into rental houses in units of buildings or relatively independent parts according to regulations.

A number of Guangzhou market veterans said in an interview with the National Business Daily that the main background of the opinions was to provide specific local implementation rules under the establishment of a housing system with both rent and purchase, on the one hand, to revitalize the stock of commercial services in the Guangzhou market. However, for developers, the key to the transformation lies in whether the commercial service property can be calculated to rent housing.

Guangzhou with many office buildings Image source: Every reporter Huang Wanyin

Increase residential increment and reduce the stock of commercial services?

In fact, this opinion is also to implement the Opinions of the General Office of the State Council on Accelerating the Cultivation and Development of the Housing Leasing Market (Guo Ban Fa [2016] No.39) and the Implementation Opinions of the General Office of the People's Government of Guangdong Province on Accelerating the Cultivation and Development of the Housing Leasing Market (Guangdong Government Office [20 17, hereinafter referred to as the "Implementation Opinions") No.7.

The reporter of National Business Daily noted that the latter two documents both stated that "commercial housing is allowed to be transformed into rental housing according to regulations" and that "the land use period remains unchanged, and the adjusted water, electricity and gas prices are implemented according to residents' standards".

Dtz pointed out in a report on "Commercial Housing Reform" that the implementation opinions echoed the State-run document, but because the implementation opinions did not provide specific implementation details, they were only issued as general guidance opinions, so local governments still need to formulate specific operational details before implementation. The Opinions can be said to be a local operation rule.

The "Opinions" pointed out that its work goal is to accelerate the cultivation and development of the housing rental market, optimize the functional structure of various types of housing in Guangzhou, effectively improve the effective supply of rental housing, cultivate the housing rental market in Guangzhou, and establish a housing system with both rent and purchase.

Xiao, chief analyst of Guangzhou, Ke Rui, told the reporter of National Business Daily that from the policy background, the Opinions is one of the concrete measures for local governments to provide rental housing through multiple channels in response to the national goal of establishing a rental-purchase housing system; Based on the market background and considering the high stock of commercial service properties in the market in recent years, some commercial service properties have practical problems such as operational difficulties and high vacancy rate, which provides a new idea for revitalizing these stock commercial service properties.

In "3? After the "30 policies", the inventory of commercial and service properties in Guangzhou market is seriously overstocked. Guangzhou "3? The "30 policies" stipulate that all first-hand apartments in the market will only be sold to legal entities and not to individuals.

Guangzhou Zhongyuan R&D Department data shows, "3? In the 20 months after the "30 policies", the average monthly transaction volume of apartments in Guangzhou dropped to 67,000 ㎡, and the inventory backlog was serious, reaching the peak of destocking for 53 months. To this end, Guangzhou also launched "12? 19 business service policy ",which stipulates" 3? Before the "30 policies", commercial service properties that transfer land can be sold to individuals. But "3? After the "30 policies", nearly 80% of commercial service land in Guangzhou requires a certain proportion of self-sustaining, of which about 40% requires self-sustaining over 70%.

Guangzhou's rental market also has a high stock. According to the statistics of Guangzhou Zhongyuan Research and Development Department, the digestion speed of Guangzhou office buildings slowed down in the first half of 20 19, and the vacancy rate decreased slightly by 0.4% to 7.55% compared with the end of last year. Among them, the vacancy rates of office buildings in Tianhe North and Yuexiu Business Circle rose to 6.72% and 7.45% respectively. Due to industry monitoring, rental cost control and other factors, some tenants in office game development, P2P lending and biotechnology industries quit.

In addition, emerging business district projects have also been put on the market. At present, there are more than 25 commercial projects under construction in Pazhou, with a total construction area of over 2.5 million square meters. Among them, the 17 project will be completed within the next year, which is expected to bring 1.6 million ㎡ of new supply to the market. Most of these projects are Internet e-commerce and media industry headquarters. In addition to the self-use part of enterprises, there will still be a large number of vacant office buildings entering the rental market. Furthermore, some office projects in another emerging business district, Financial City, have begun to be delivered to the market, but the vacancy rate of the project is high due to the imperfect commercial facilities in this sector.

Does the stock of commercial service property usher in new opportunities?

"Commercial and residential" has become a new way to revitalize existing commercial service properties, but not all commercial service properties are suitable for renovation. On the one hand, this opinion is quite strict with reconstruction projects; On the other hand, reconstruction projects still need to reach a certain level of return on investment.

Judging from the requirements of this opinion, the project applying for reconstruction must meet the requirements of clear ownership, structural safety, fire safety, environmental protection and hygiene, property specification, complete supporting facilities and technical standards. In addition, when the decoration project is initially registered, it should be registered as a whole (only one ownership certificate should be handled) and the whole transfer should be made. Ownership, transfer, mortgage and sale shall not be divided, and the original land use period, land use nature and building volume shall remain unchanged.

"For developers, because the property of' commercial change to live' must meet the restrictions such as overall confirmation and inseparable transfer, this means that if you choose' commercial change to live', the cycle required to realize the return of funds through housing rental income will be greatly extended, so this option may not be given priority. For some historical stock properties on hand, more consideration is given." Small further statement.

Dtz's analysis of "changing business to living" in the above report mainly assumes those projects with poor operating conditions (retail malls on the verge of closure, or low-quality office buildings with low rent and high vacancy rate, etc. ) they are all rented after renovation.

Long Bin, an expert member of Guangdong Housing Society, pointed out to the reporter of National Business Daily that although the reform of rental housing business may increase the rental supply, it can also solve the problem of developers in "3? Under the "30 policies", the sales of professional clothes are not smooth and the inventory is surplus. " However, from commercial development to the construction and operation of self-sustaining rental housing, this bend has turned too big for developers, and investment calculation and market evaluation have to be repeated. "

Dtz also analyzed that the advantage of "changing business to residence" is that it can balance the supply of commercial and residential properties, and some poorly planned or designed commercial projects may be rented out in a more feasible way. However, compared with the purpose-built houses, the architectural design and technical specifications of the "commercial to residential" project may not be ideal.

However, Qiao, executive director of Colliers International Consulting Services in South China, told reporters that developers will definitely tend to transform, which is better than leaving them vacant. Turning to long-term rental apartments is actually a change in living style of destocking. Some office buildings and skirt buildings may not be rented out or the rent is very low due to the geographical location and height restrictions, but residential products will not be affected by this and there will be more markets.

However, according to Long Bin, at present, the rental rate in Guangzhou is generally not high, and the high-end apartments are higher, with the average rental rate just exceeding 1. "Because the location and conditions of different projects are very different, it is impossible for commercial service properties to turn to rental housing. In a word, the benefit is limited, which provides a new way for the comprehensive evaluation of some projects. As for ordinary buyers, there is no impact at present. "