Core Tip: on the “Government Work Report” made on NPC and CPPCC, this year it is going to build 10 million units of affordable housing, and to build 10 million units next year. During the period of “十二五”，there will be a construction of a total of 36 million units. Expert analyzes, with the next batch of affordable housing go into the market, the government can gradually open up the right to operate, let the independent developer manage the follow-up operations.
On the “Government Work Report” made on NPC and CPPCC made, this year it is going to build 10 million units of affordable housing, and to build 10 million units next year. During the period of “十二五”，there will be a construction of a total of 36 million units. This year the central government will grant 103 billion yuan to local governments. Beijing vice mayor Chen Gang said, “in the future in Beijing, 70% of housing will be built by the government house.” Industry insiders estimate that in the future of Beijing real estate market, affordable housing will be the protagonist, living environment for commodity housing corporation will become increasingly difficult.
Pan Shiyi, chairman of SOHO China, said the purpose of this regulation is to reconfigure the structure of real estate market, turning commodity housing accounted for more than 90% of to affordable housing accounted for more than 50%.In the future, pattern of real estate will undergo drastic change, more than 50% of developers will be eliminated.
Experts predict that at the current round of government proposed affordable housing policy, land, and capital, clear responsibilities are unprecedented, called unprecedented. In the future, development of affordable housing will be the company’s “Set Action”, then, small and medium property enterprises who are unable to develop affordable housing will be the first face a fate of being eliminated.
Affordable Housing becomes a new strategy for Real Estate Company
Against this background, a number of real estate companies, Sino-Ocean, Vanke, Beijing Capital Land, Huayuan, R & F, Longfor have begun to make adjustments. BCL chairman Liu Xiaoguang said the future of affordable housing development will be the most important development of the strategic direction of Beijing Capital Land. Yu Liang, president of Vanke has more high-profile position, “we say to local government, if we build affordable housing, only give me a dollar of profit is enough. Why give a dollar profit? So shareholders can say that we do not lose money on this project”. This is not the first time that Vanke claimed to make large-scale investment in affordable housing development, but it was the first time to make such high-profile statements. Mao Daqing, vice president of Vanke Group has said that the current Chinese real estate industry is facing profound structural adjustment. Vanke Group is actively seeking new strategic layout, in the future it will be more into the development of the field of affordable housing.
Sino-Ocean real estate vice president Xu Li said, from policy development to determine the future of real estate projects in Beijing, the proportion of low-income housing portion may further double from the current 30% to 60%, large-scale affordable housing construction is the general trend.
Data show that there have been some new changes in Beijing land transfer policy last year. Some land transfer is in the form of a comprehensive evaluation, breaking the traditional auction, with the majority of land to build affordable housing — “hard targets” as a prerequisite to get to business.
Thereafter, Vanke representing the large real estate companies have invested in the business. Vanke with BUCC won Huilongguan block in total 1.28 billion yuan, Huayuan Group, with Shengshixinye (盛世新业) won new business to 1.78 billion yuan in Tongzhou Liyuan plots, and these plots are with affordable housing. Wherein Tongzhou Liyuan Lot is a lot that Huayuan Real Estate has got again after so many years to take place in Beijing, the total land area is 312,000 square meters building, and with the construction of affordable housing in the area amounted to 158,000 square meters, a total construction area of more than half of the industry’s attention.
Analysts believe that under the guidance of the government, “real estate + affordable housing,” the two-track system has received corporate approval. First block “limited land lease area of competition policy” deal Shunyi Zhang Zhen Lot has bid numbers up to 117 times before the final sale.
With the policy of affordable housing implementation become increasingly clear, many large enterprises have understood the government’s “intention” and “determination.” Affordable housing development is becoming the targets of large real estate companies such as Sino-ocean, Vanke, Beijing Capital Land, R & F, Longfor and Huayuan.
Development and operation mode still needs exploration
Experts suggest that in the context of the government putting affordable housing on the agenda, enterprises increasing investment, development and operation model of affordable housing needs further exploration. At this stage, real estate companies are mainly builders. On one hand, development profits is low, so there is low intention from the side of companies, on the other hand, there are uncertainties of building and post-operation of affordable housing. Sustainable management model is still in the exploration stage, so we expect more participant companies have a wait-and-see attitude.
Yu Liang believes that the promotion of affordable housing is mainly by the government, developers cannot plan how much they can build affordable housing. If in the future the system can make affordable housing continue operate, Vanke will be greatly involved. He said that in the future they can help the government to do something on behalf of the housing construction projects, the government is responsible for funding and land, whereas businesses responsible for housing, management fees.
Expert analyzes, with the next batch of affordable housing market coming into market, the government can gradually open up the right to operate, and the independent developer manages follow-up operations. On one hand, it can reduce the burden on the government, but also bring a stable income to the enterprise in the latter part of property services, so that the occupants benefit and achieve win-win situation.
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