Author |A look at the financial Ganymede.
Edit |Alpine
In the legends of the ancient Roman Empire, the "Ship of Theseus" was a warship that sailed the seas for hundreds of years. Over the course of its years, the Ship of Theseus underwent a constant cycle of repairs and replacement parts, and as soon as a single plank rotted, it would be replaced, and the cycle would be repeated to make it ride the waves.
This story leads to a famous paradox: when all the planks and functional parts are not the original ones, will the ship still be the same ship?
This paradox is worth thinking about in China's real estate industry, as well as real estate companies that are urgently seeking change under the fierce fluctuation cycle.
from"Cool down" to "wait".
If you can sum up the real estate industry in the past few years in two words, it is "cooling down".
In the past few years, the impact of the epidemic, low fertility, economic growth slowdown, digital economy and other basins of cold water have been poured on the body of major real estate companies, at the same time, the "three red lines", "two concentrations of housing loans", "centralized land supply" and other regulatory policies have made major real estate companies in the land, sales, loans and other links have encountered varying degrees of impact, real estate this pot of bubbling boiling water is constantly cooling, gradually bidding farewell to the "first era" of barbaric proliferation, into the "cold winter".
However, 2023 seems to have become an important turning point for the real estate industry. If there are two words to describe the new situation, it is "waiting".
On July 24, the Politburo meeting proposed to "adapt to the new situation of major changes in the supply and demand relationship of China's real estate market", which set the tone for the real estate market.
Different from the previous continuous contraction and supervision of the industry, since 2023, in terms of policy, real estate companies have been untied to a certain extent across the country.
According to the monitoring of the China Index Research Institute, as of November this year, more than 200 provinces and cities (counties) have issued real estate regulation policies more than 600 times, and most of the restrictive policies in cities have been completely liberalized, and the policy environment is close to the most relaxed stage in 2014.
Since August 2023, Jiaxing, Dongguan, Foshan, Shenyang, Dalian, Nanjing, Lanzhou, Jinan, Qingdao, Zhengzhou, Hefei, Wuxi, Wuhan and other cities have completely canceled the purchase restriction policy; Guangzhou, Shenzhen, Beijing, and Shanghai, the four major first-tier cities, have successively announced the implementation of the policy of "recognising houses but not loans", and in addition, they have also adjusted and optimized a number of property market control policies, such as reducing the down payment ratio of second homes, adjusting the standards for luxury houses, optimizing the identification standards for ordinary residences, and lowering the down payment ratio for house purchases.
However, this does not mean that the real estate industry has ended the "cold winter" and ushered in a recovery. On the one hand, whether it is to survive the cold winter or usher in recovery, it is a long-term and dynamic process, especially in the interval between the alternation of the old and new environments and the adjustment of macro policies, the entire industry will usher in a period of violent fluctuations; On the other hand, for the real estate companies in the center of the whirlpool, like the downward cycle in 2008 and 2014, real estate companies must be prepared to wait for hibernation, and optimize their development model while waiting, but also have a clear understanding of the so-called "recovery", a new round of "recovery" will no longer be the simple, bottoming out market "rejuvenation" in the past, but after a fluctuation, the transformation and upgrading of the entire real estate industry, so as to enter a new development situation of higher quality.
If the entire real estate industry is compared to the "ship of Theseus", when each real estate company in the industry has made changes in response to the general industry changes and its own development needs, this ship will undoubtedly have a qualitative change from the original ship.
As Feng Kui, vice chairman of the China Association for Regional Science, said: "The recovery of the real estate industry should be measured by both quantity and quality. Real estate provides a space, and whether this space can carry new functions, new technologies, and new products, and whether it can become an important carrier of new quality productivity is of greater significance for recovery. ”
How to ride out the volatility cycle?
Due to the greatly increased cost of trial and error, the exploration of new development models is a luxury for many real estate companies, but they have to do it, on the one hand, real estate companies need to force themselves out of their comfort zone to survive; On the other hand, real estate companies have to stay in their comfort zone to recover. In the face of such contradictions, in addition to choosing the right method of change at a limited cost, it is more necessary to consolidate the existing barriers and provide ammunition and defense space for continuous error correction.
In general, under the fluctuation cycle, real estate companies should give priority to "focusing on stability and making progress in stability".
In the real estate industry, when it comes to stability, there is one real estate company that has to be mentioned, and that is Longfor.
In the big rivers and lakes of China's real estate industry, Longfor has always been a very special existence.
Since its establishment 30 years ago, Longfor has always been regarded as the "goalkeeper" of private real estate enterprises, and has been cautious in its development strategy. In the real estate industry, which emphasizes scale as king, pursues to create images and stories, and is keen on radical development, Longfor can be described as a standout, always maintaining a low-key and prudent approach, taking a step by step approach, exchanging a slow pace of development for healthy growth, and becoming one of the few financially healthy "green" real estate companies in the current industry winter.
With the reform of the industry, the industry as a whole bid farewell to the model of high leverage and high growth, and the continuous and precise implementation of supportive policies has helped the industry enter a new stage of steady development.
In 2023, Longfor will continue its consistent and steady style, and in the turbulent and turbulent industry, Longfor seems to have a unique scenery.
From the perspective of performance, on January 12, Longfor Group announced that the contracted sales of real estate development in 2023 will be 1734900 million yuan, the contracted sales area reached 107960,000 square meters, operating income of about 265300 million yuan, a year-on-year increase of about 6%. In the 2023 sales list released by CRIC, Longfor ranked ninth in both the full-caliber amount and the equity amount, closely following the national teams. In terms of collection rate, during the reporting period, Longfor's sales collection rate still exceeded 100%, which continued to maintain a high level.
In terms of debt, according to the data of Great Wisdom VIP, Longfor Group repaid at least 56$41.2 billion of onshore public debt. As for the debt for the whole year, at the interim results communication meeting of Longfor Group held in August last year, Longfor's management said that the company's debt due next year (2024) is about 23 billion yuan, and the foreign currency debt due is almost zero.
In addition to relatively healthy and stable financial data, in terms of land acquisition, different from the cautious upward cycle, Longfor has gone against the grain and actively stored land, becoming one of the few real estate companies in the industry that is still actively storing land. Longfor focuses on first-tier and strong second-tier cities, and makes precise attacks to expand its land reserves. In December 2023, Longfor Group won 265.3 billion and 2900 million yuan **, has won the core plots of Hangzhou and Chengdu. As of the end of the year, Longfor Group had acquired 31 new land parcels during the year, with a total construction area of 3.45 million square meters and an equity land price of 25.9 billion yuan.
Compared with Longfor's active moves, other big-spending players in the land market have tacitly tightened their money bags. According to CRIC data, in 2023, the total value, total price and construction area of the top 100 real estate enterprises will be 3,151.5 billion yuan, 1,548.5 billion yuan and 133.59 million square meters, a year-on-year decrease of % and 3% respectively.
On the consumer side, Longfor actively responded to the instructions of the bottom line of "guaranteeing the delivery of buildings" to reduce potential thunderstorms. In the fluctuating industry cycle, "delivery" is like a luxury competition, dividing real estate companies into three, six, nine and so on. Whether it can be delivered on time, or delivered ahead of schedule, and with high quality, is an important basis for real estate companies to demonstrate their comprehensive capabilities at present, and it is also the result of the company's R&D, development, finance, operation, etc. in the past few years.
In 2023, Longfor delivered a total of about 140,000 sets of quality to more than 160 projects in 56 cities across the country, of which about 20% of the projects were delivered more than one month ahead of schedule, and the overall satisfaction rate exceeded 90%, which not only set a record for the largest delivery scale in Longfor's history, but also was very bright in the industry during the same period.
Longfor's change and change
As mentioned above, under the fluctuation cycle, real estate companies should "focus on stability and make progress in stability". To focus on stability lies in surviving in the present; Steady progress lies in surviving in the future. One is indispensable.
In terms of "stability and progress", Longfor still provides a paradigm of change for major real estate companies, especially private capital.
Longfor's progress is first reflected in its strategic planning.
For a long time, Longfor has always adhered to the development strategy of "space as a service", and all its prudent development measures are carried out around this strategy, which is also the core secret of Longfor's long-term success.
Under the core of "space and service", Longfor adheres to a decentralized layout and diversified investment.
Regarding the decentralized layout, taking the sales layout as an example, Longfor's real estate sales business is mainly distributed in the Yangtze River Delta, Bohai Rim, Western China, South China and Central China, and their respective sales proportions are respectively. 4% and 8%, showing a decentralized layout overall, and the major regions effectively shared the regional risks; At the same time, about 90% of Longfor's sales value is concentrated in high-energy cities and value areas, and the scattered value concentration has laid the foundation for Longfor's subsequent profit growth.
With regard to diversified investment, Longfor adheres to the dual-track system of property investment and commercial investment. As one of the earliest shopping mall developers in China, Longfor has been engaged in commercial investment and operation for 22 years, and has developed two major commercial product lines: Tianjie and Xingyue Hui. Longfor Commercial has entered 28 cities across the country, with a total of 88 commercial centers, a construction area of 5.24 million square meters of shopping malls, and more than 140 commercial projects.
In recent years, commercial investment has gradually been put forward to an important strategic position by many real estate companies, and in the context of the whole industry gradually entering the long-term range, almost all major real estate companies have given up a single real estate development business and turned to explore more complex integrated business. It is foreseeable that the long-term importance of commercial investment will go beyond development investment and property investment, and after the end of the real estate development stage, how to achieve business planning and sustainable operation will become the focus of the project.
Longfor's progress is also reflected in the iteration of products.
Economist Jin Yanyan once said that the post-urbanization stage has three characteristics: the first is the differentiation of cities, the second is the center of the center, and the third is the surge in demand for high-end improvements. The three characteristics correspond to the magnitude of the city, the location, and the quality of the product, and illustrate the actual needs of consumers for the ideal housing at present.
As mentioned above, the Politburo meeting proposed to "adapt to the new situation of major changes in the relationship between supply and demand in China's real estate market", to put it bluntly, many real estate companies have to face how to realize the transformation from the supply market to the demand market. How to realize the transformation from a seller to a service provider.
In terms of products, Longfor has provided a new idea to the industry.
In 2023, Longfor, mainly in first-tier cities, has successively launched new product lines for the high-end market, such as Yuhu Mirror, Yunhe Song, Qingyunque, and Yanxitai, all of which have achieved good sales in the market.
Taking Yuhu Mirror as an example, Longfor is no longer confined to low-end security needs, but for the increasingly fragmented market, it further focuses on high-end improvement needs, and continuously upgrades its own services and products in terms of land selection, material selection, development, and follow-up services. Meng Fanhao, co-founder and principal architect of Line+ Architects, commented on the latest iteration of Longfor's products, pointing out the core behind the iteration of Longfor's products, that is, "the upgrading of product power not only brings about the improvement of the living experience, but also takes the unprecedented artistic quality as the core, so that art can be integrated into life and higher than life." ”
It can be seen that in exploring how to change from a seller to a service provider, and in terms of product upgrading, Longfor has given its own suggestions to the market: refine the increasingly complex market, focus on demand, and catch up with high-quality demand with high-quality products and services.
Back to the beginning of the article, in the face of the paradox of "Ship of Theseus", Longfor also gave his own thoughts. At the 2022 annual results meeting, Chen Xuping, chairman of Longfor Group, said in response to Longfor's changes and changes: "What remains unchanged is the background color of Longfor, including business strategy, corporate culture, etc. What has changed is that according to the internal and external situation, the company will make adjustments such as business restructuring, pay more attention to asset quality, control interest-bearing liabilities, and continuously improve corporate turnover; The second is the reconstruction of the waterway, which has become a model of '1+2+2' development, operation and service of the three major business sectors going hand in hand, that is, one development channel, two operating channels and two service channels. ”
This is also another new idea provided by Longfor to the entire real estate industry, "stability" and "change" complement each other but also hinder each other, and at the same time indispensable, the tide of the times is rolling, it is very important to live, and it is more important to live yourself.