Xia Lei: The Impact and Prospect of the Epidemic Situation on the Real Estate Industry Pattern

This issue focuses on the impact of the epidemic on the competition pattern of the real estate industry.

With the effective control of the domestic epidemic in Xia Lei, the real estate market is gradually recovering. In previous issues, we comprehensively analyzed the impact of the epidemic on housing demand, real estate sales, investment and financing. In this issue, we focus on the impact of the epidemic on the competition pattern of the real estate industry.

The increase of concentration is a remarkable trend of China real estate industry in recent ten years, which has been further accelerated since the regulation from 2065438 to 2006. 20 1 1-20 16 years, TOP 10, TOP50, TOP 100 housing enterprises' market share increased annually 1.5, 2.7 and 3.2 percentage points, while 20/0.

1. Under the epidemic situation, the industry has accelerated its differentiation and its concentration has greatly increased in the short term.

In the first quarter of 2020, the market share of TOP 10, TOP50 and TOP 100 increased by 10.0,1.0 and 7.8 percentage points respectively compared with 20 19. There are two main reasons. First, the epidemic has tested the capital chain of housing enterprises, and the sales rebate, which accounts for 50% of the source of funds, has decreased, and the rigid expenditure, which accounts for 2/3 of the capital expenditure, is still considerable. Small housing enterprises with weak anti-risk ability have accelerated their withdrawal. As of April 8, 2020, 84 real estate development enterprises went bankrupt and liquidated within 65 days after the holiday, with a year-on-year increase of 25.3%, all of which were local small and medium-sized housing enterprises. Second, large housing enterprises increased online marketing and discount promotion, and sales were relatively less affected by the epidemic. In 2020, the average year-on-year growth rate of sales of 10, 50 and 100 housing enterprises decreased, which were-15.7%, -28.7% and -37.2% respectively. The average selling price increased year-on-year, being-1.8%, 3.3% and 4. 1% respectively.

With the gradual control of the epidemic, the demand for housing has been released smoothly. In a stable market environment, the growth of sales scale of large housing enterprises will promote the continuous improvement of industry concentration. In 2020, it is estimated that the national commercial housing sales amount will be 15.3 trillion yuan, a slight decrease of 4. 1% year-on-year. The total number of 33 top 50 real estate enterprises that announced their sales targets increased by 9.5% compared with 20 19, and their market share is expected to increase by 6.5 percentage points compared with 20 19.

2. After the epidemic, the five core competitive advantages of large housing enterprises, such as land reserve, product quality, financing ability, cost control and project layout, have been highlighted, ensuring the sustained growth of their performance.

First of all, the epidemic situation directly strengthened the soil storage and product advantages of large housing enterprises. First, the epidemic prompted local governments to relax their land acquisition policies and increase the supply of quality land. Large housing enterprises seize the land acquisition window to obtain high-quality land, and the concentration of land acquisition is improved. In the first quarter of 2020, among the 100 top real estate enterprises, the top 20 enterprises accounted for 29.9%, 2.3 percentage points higher than that of 20 19. In addition, the epidemic accelerated the withdrawal of small housing enterprises, and large housing enterprises took advantage of the opportunity to acquire. In the first quarter of 2020, the M&A amount of the real estate industry was 36.86 billion yuan, a year-on-year increase of 702.4%. Second, the epidemic has made residents pay more attention to the quality of life. The projects of brand real estate enterprises have obvious advantages in product positioning, apartment design, supporting facilities, landscaping, building quality and property services. And it is easier to get rid of, and the premium is more obvious.

Secondly, the policy and industry environment after the epidemic are conducive to large housing enterprises to give full play to their financing, project layout and cost advantages. First, the liquidity environment of housing financing has improved after the epidemic, but the real estate financial policy will remain "continuous, consistent and stable", and it is difficult to greatly relax the financing channels. First, the main channels such as development loans, trust financing, credit bonds and overseas bonds have higher thresholds, and financing channels for large housing enterprises are more abundant; Second, the low-cost financing channels of large-scale housing enterprises are smoother, the collateral is sufficient, the credit qualification is better, and the financing interest rate is lower. Take the listed real estate enterprises in TOP19 as an example. From 20 16 to 20 18, the average comprehensive financing cost of the top ranked 10 was 5.4%, 5.3% and 5.7% respectively, which was significantly lower than that of the bottom ranked 10.

Second, large-scale housing enterprises have all-round advantages in land acquisition, construction and installation, financing and management costs, and their projects can gain more profit space on the basis of meeting a certain return on investment. After the epidemic, the tone of "waiting for the house without speculation" remains unchanged, and buyers just need to make prudent decisions and have high price sensitivity, and the cost-effective advantages of large-scale housing enterprises are highlighted.

Third, the epidemic has increased the risk of fluctuations in a single market. In the first quarter of 2020, the transaction area of commercial housing in 55 of 86 sample cities decreased by more than 25% from the previous month. Large-scale housing enterprises have many projects and a wide layout, which can flexibly adjust sales arrangements and effectively hedge the risks of a single market. After the epidemic, the housing demand was released smoothly, the regional market capacity was limited, and the competitive pressure increased. The contribution of large-scale housing enterprises in a single city is low, and performance growth can be achieved by increasing the project expansion of the layout cities. The statistical analysis of the sales data of the top 100 real estate enterprises in 20 19 shows that the sales amount is significantly positively correlated with the number of cities, and the sales amount increases by 30/kloc-0.0 million yuan for each additional city.

3. After the survival of the fittest in the market, large-scale housing enterprises will have better cost control ability, product building ability and risk resistance ability, promote the stable development of the industry, prevent and resolve financial risks, and improve the living standards of residents.

Policy formulation should conform to the trend of survival of the fittest in housing enterprises, ensure the upgrading of residents' housing consumption and maintain the stable development of the industry. First, encourage large-scale housing enterprises to eliminate the adverse effects caused by the break of the capital chain of small and medium-sized housing enterprises through mergers and acquisitions, and support reasonable M&A financing. The second is to ensure the reasonable housing consumption of residents, increase the supply of residential land in hot cities on the supply side, continue to promote shed reform, intensify the transformation of old communities, and develop rental housing; Moderately modify the inappropriate control measures on the demand side, give local governments greater autonomy, and support the just-needed and improved type because of the city's policy. Third, we can establish an index system for real estate regulation model housing enterprises and promote the experience of benchmarking housing enterprises.

Enterprise management should be continuously upgraded from three dimensions: land acquisition, products and marketing. First, optimize land acquisition, reduce risks, improve turnover and control costs; The second is to upgrade products to better match market demand; Third, innovate marketing, upgrade and improve online whole-process marketing.

Vice President of Xia Lei Evergrande Research Institute, columnist of opinion real estate new media.