The next few years should be the most difficult time for real estate developers, and there is no one.
As a representative of a number of real estate developers, Country Garden is also facing a serious cash flow crisis, and currently has a debt of 14 trillion yuan, second only to Evergrande, in October last year, Country Garden defaulted on a debt of $11 billion in overdue interest payments, making it the largest debt default in history.
In order to recoup funds to repay debts, Country Garden began a new round of selling off domestic and foreign assets.
On January 26 this year, Country Garden sold off a real estate development project near Sydney, Australia, and completely exited Australia, with a transaction value of 1$5.7 billion.
This time, Country Garden's real estate project in the UK is called "Elsa Wharf", which plans to build 952 residences with a total value of about 4£500 million.
This is the land purchased by Country Garden in 2018 with ** Company and Hao Holdings for 80 million US dollars, with a total area of 62 acres, 13 apartment buildings are planned, each between 3-17 floors, which also includes 785 residential and office space.
Country Garden has only one purpose in selling overseas high-quality assets, that is, to recoup funds, and in the real estate industry where "cash is king", Country Garden is undoubtedly "surviving with broken arms".
Not only foreign assets, Country Garden is also actively selling domestic assets.
According to a report, Country Garden has recently listed five of its real estate projects in Guangzhou, including the well-known Phoenix Hotel, Country Garden Center, five-star hotels, Grade A office buildings and high-end apartment buildings.
These buildings are all quality assets that are strategically located and fully functional.
Country Garden's first-class sale coincides with Wanda that year, and has also triggered a new round of high attention, Country Garden, as one of the largest real estate developers in China, this sell-off has obviously revealed the grim situation that the domestic real estate industry is currently facing.
These landmark buildings reflect Country Garden's strength and ambition back then, but under the pressure of Country Garden's huge debt, the former benchmark of real estate developers had to sell off their high-quality assets one by one.
Yang Huiyan, chairman of the board of directors of Country Garden, pointed out at the company's annual meeting on January 15 that the real estate market has not recovered as expected and is still in the process of self-repair.
And her estimate of the trend of the real estate market this year is still "hovering at a low level".
Since it is hovering at a low level, the biggest dilemma for Country Garden may not be the cash flow debt problem, but how to complete the delivery of the building.
Guaranteeing the delivery of the building is to ensure that the unfinished building can be successfully completed and delivered to the owners who have already paid, so as to avoid them taking collective action to cut off the supply.
In 2023, Country Garden has delivered more than 600,000 homes, and this year it is expected to deliver 480,000 units.
In the face of the general trend of the entire industry, Country Garden is also essentially reducing costs and increasing efficiency.
As early as the end of last year, Country Garden Group executives, including Yang Huiyan, took the initiative to reduce salaries, and Country Garden also decided to cancel the allocation of senior executives' cars and implement centralized control over the use of vehicles to reduce costs.
In addition, the reimbursement of medical examinations and free canteens for Country Garden executives have also been cancelled, and the administrative expenses of the whole group are based on the principle of zero, and no expenditure is made unless necessary.
But even so, as a real estate developer, the most important thing may not be to reduce expenditure, but how to open source.
In the context of the downturn in the real estate industry, not only Country Garden, but almost all real estate developers are inevitably caught in that predicament, how to stimulate people to buy houses?
This is a problem.
Originally, according to the normal market logic, when the demand is insufficient, enterprises will generally reduce prices to inventory, last year's new energy industry, clothing, food, milk tea and coffee are almost all the same, all of them have started a war, while reducing prices, in order to grab more market share as much as possible.
But real estate, obviously, cannot act according to complete market logic.
One of the main obstacles is the limited room for real estate price reduction.
Behind this is the ancient role of the fall limit order.
The fall restriction order first appeared in August 2021, when Yueyang required that the local new house price should not be lower than 85% of the record price, that is, the property price should be up to 15%.
The real estate industry is still strong today, which is not very compatible with the trend of China's CPI and PPI, although housing prices have fallen in recent years, but from the data, the decline in housing prices is still very limited, and the fall limit order is largely in play.
This is also the fundamental reason why many industries were fighting a big war last year, but the real estate industry was relatively deserted.
As a commodity, the importance of the house is self-evident, the fall limit order is also based on this factor, once the housing prices are completely liberalized, may further squeeze the real estate bubble, real estate once a hard landing, the negative impact on China's macroeconomy, immeasurable.
However, housing prices do not fall, and people's enthusiasm for buying a house is difficult to play a substantial role in promoting, especially in the context of today's slowdown in growth.
The number of people buying houses has decreased, and for real estate companies like Country Garden, which are in urgent need of funds to be withdrawn, the pressure will continue to increase over time.
This is a dilemma.
But more concerned than these, we may be more concerned about how long in the long run, with today's housing prices, can they be strong?
Or will consumers still be able to pay for today's house prices?
In the past, the brutal growth of the real estate industry was inseparable from the rapid growth of China's macroeconomy, and now with the slowdown of growth, the growth rate of people's wealth has begun to slow down, and even many people have shrunk.
As a result, the real estate problem is not only reflected in the real estate companies facing the cash flow crisis, but even the local income has also been very impacted.
In 2023, the income from the transfer of local state-owned land use rights in China will be about 5,799.6 billion yuan, a year-on-year decrease of 132%, which is nearly 3 trillion yuan less than the historical peak in 2021.
According to the statistics of the Guangfa Research Institute, in 2023, the income from land transfer will increase in Tianjin, Jilin, Heilongjiang, Inner Mongolia, Beijing, Hainan and Hebei, while the rest of the provinces and regions will decline.
Country Garden's sale of high-quality assets at home and abroad also illustrates the severity of the group's own cash flow, and at such a special moment, the uncertainty faced by the real estate industry is also greatly increasing.
When the growth of personal wealth begins to slow down, and when people have begun to remain unmoved by the high housing prices, the real question may be, how to save the housing companies while still stimulating people's willingness to buy houses, and ultimately not lowering the price of houses?
This is something that is almost impossible to achieve.
Now, perhaps, it's time to make a trade-off.
end.Author: Luo sir, the workplace reference of the new youth. Concerned about the logic behind the development of things, optimistic pessimists. Follow me and grind the knowledge to you.
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