Lead. Urban investment has been an important subject in maintaining the stability of the land market in the past three years, and it is also the new normal in the process of clearing and adjusting the downward cycle of the industry.
Thematic perspectives. In the three years of centralized land supply, urban investment has gradually become an important theme for maintaining the stability of the land market. However, in view of the fact that the operation and development capabilities of urban investment companies are not as good as those of real estate enterprises, the market pays more attention to the development of urban investment land acquisition projects. This paper mainly analyzes the changes in the total amount of land acquired by urban investment in the past three years, the start of construction, and the sales situation, and the current way out of the land supported by urban investment and the opportunities brought to other enterprises in the future.
In the three years of centralized land supply, nearly half of the number of urban investment participated in land acquisition, and the amount of land acquisition first rose and then decreased. From 2021 to 2023, the total amount of land acquired by urban investment companies will show a trend of "rising first and then falling", and the amount of land acquired in 2023 will drop by 50% year-on-year, with the largest contraction.
The operating rate of urban investment is less than 30%, and the operating rate of central state-owned enterprises is more than 60%. From 2021 to 2023, the start-up rate of land acquisition projects by urban investment companies will be 2523%, while the overall operating rate was 49%. The project sales rate of the urban investment company is 1591%, and the overall sales rate is 40%. The total operating rate of central enterprises and local state-owned enterprises reached 6755% and 7647%, and the sales rate reached 6066% and 6629%, much higher than urban investment companies. In addition, it takes 136 days and 410 days for urban investment companies to acquire land and start construction and sales, and the number of days required for the other three types of companies is about 50% longer.
The proportion of cooperative development and land acquisition by urban investment accounts for 20%, and central state-owned enterprises are the preferred choice for seeking cooperation. There are 147% of the urban investment projects are already in the form of joint land acquisition in the land acquisition stage (of which the proportion of "urban investment + private enterprises" joint land acquisition accounts for 30%), while the proportion of the remaining land acquired by urban investment is only 63%, its ** state-owned enterprises are limited consideration objects for urban investment to seek cooperation, such as China Communications, China Railway, China Resources, Poly, etc. are important cooperation objects of urban investment companies.
The rate of land acquisition and development of urban investment cooperation was 54%, which was 23 percentage points higher than that of independent land acquisition. According to CRIC statistics, among the 2000+ lands participated by urban investment in the past three years of centralized land supply, the overall start-up rate of land acquisition and development by urban investment cooperation was 54% (the number of plots that have been started in urban investment cooperation projects in the past three years and the total number of land acquired and developed by urban investment cooperation in the past three years), while the start-up rate of land acquired by urban investment independently and without finding a partner was only 21%, a difference of nearly 23 percentage points.
There are many cooperation projects in Wuxi, Suzhou and Qingdao, and it is easier to reach cooperation in urban projects. In the past three years, there are more than 70 such projects in Wuxi, and more than 50 such projects in Suzhou and Qingdao, far exceeding other cities in terms of number and scale. Compared with the proportion of urban investment cooperation in urban and suburban plots, the proportion of urban land cooperation reaches 26%, and the proportion of suburban project cooperation is 17%, and urban projects are easier to achieve.
In the past three years, nearly half of the land has been acquired by urban investment.
However, the operating rate is less than 30%.
As a platform for local investment and operation, urban investment companies have become a force to be reckoned with in the land market in the past three years. However, with the adjustment of the market and the change of the industry situation, the land acquisition situation of urban investment companies will show new changes in 2023. In 2023, the amount of land acquired by urban investment companies will drop by 50%, and the price of real estate and the premium rate will increase on the contrary. However, urban investment companies still face challenges in terms of operational efficiency, with both operating rates and sales rates far below the industry average. There are also significant differences in the performance of urban investment companies between different cities, with urban investment companies in core cities leading the way in terms of land acquisition amount and construction efficiency.
1. The amount of land acquired by urban investment companies first rose and then decreased, and the number of people participating in land acquisition in three years accounted for 46%.
With the changes in the land market and the overall trend of the industry since the centralized land supply in 22 cities, the role of urban investment companies in the land market has also changed, and the total amount of land acquired has changed significantly in three years
In 2021, the amount of land acquired will be 535 billion yuan, and in 2022, the amount of land will be 616.7 billion yuan, an increase of 15% year-on-year, as the market turns cold and the urban investment company's own funds are under pressure, in 2023 (data as of November, the same below) the amount of land acquired by urban investment companies will only be 258 billion yuan, a year-on-year decrease of -58%, and the annual land acquisition amount is expected to decrease by more than 50%.
Compared with the changes in the amount of land acquired by other types of enterprises, although the amount of land acquired by central enterprises and local state-owned enterprises has decreased year after year, the decline rate is smaller than that of urban investment companies; The sharp contraction in private enterprise investment occurred earlier, and the amount of land acquired in 2022 has fallen by 57% year-on-year.
Correspondingly, the construction area of land acquired by urban investment companies will also decrease significantly in 2023: in 2023, urban investment companies will acquire 29.08 million square meters of land and construction area, a year-on-year decrease of 58%, and a decrease of 62% compared with 2021. However, unlike the trend of the amount of land acquired rising first and then falling, the land acquisition area of urban investment companies has been declining year after year.
Other types of real estate enterprises have also shown a decline in land acquisition and construction area for two consecutive years, but there is a big difference in the decline: the decline of central enterprises and local state-owned enterprises is smaller, while private enterprises will take the lead in significantly shrinking the land acquisition and construction area in 2022, and it will fall further in 2023.
In terms of land acquisition**, it showed an opposite trend to the total amount, and the average floor price of land acquired by urban investment companies increased, with an average floor price of 8,874 yuan square meters in 2023, which was basically the same as in 2022 and an increase of 26% compared with 2021. Under the shrinkage of the scale of land acquisition, the average floor price has increased, reflecting that the urban investment company has also begun to implement the investment strategy of "more expensive and more expensive, focusing on high-quality land plots".
However, compared with the price of land acquisition and floor slabs of other types of real estate enterprises, the average price of land acquisition by urban investment companies is still at the lowest level, and the price of land acquisition by central enterprises and local state-owned enterprises is relatively high, and more attention is paid to the scarcity and quality of land acquisition.
Combined with the premium rate, the difference in land acquisition is more significant
In the past three years, the average premium rate of land acquisition by urban investment companies has remained below 4%, which is the lowest premium among all types of real estate enterprises. In particular, in 2022, the average premium rate of land acquisition by urban investment companies is only 098%, the role of "supporting the bottom" to stabilize the land market is obvious, and the average premium rate in 2023 is 209%, an increase of 1 compared with 202111 percentage points.
On the contrary, the average premium rates of central enterprises, local state-owned enterprises, and private enterprises in 2023 are respectively. 21% and 909%, much higher than the premium rate of urban investment land acquisition, these real estate companies mainly pursue high-quality land plots, and the competition for land auctions is also more intense.
In terms of commonality, it can be seen that the highest premium rate of land acquisition of various real estate companies will occur in 2021, while the premium rate will be the lowest in 2022, and it will rebound in 2023, but it has not yet risen to the level of 2021.
Second, the start-up and sales rate of urban investment is lower than the overall level of 24pct, and the three-year start-up rate is only 25% (some omitted).
Compared with the start-up rate and sales rate of urban investment companies and other types of real estate enterprises (both calculated by the number of amplitudes), the project operation efficiency of urban investment companies lags significantly behind
From 2021 to 2023, the start-up rate of land acquisition projects by urban investment companies will be 2523%, while the overall operating rate is 49%, which is 24 percentage points higher than the operating rate of urban investment projects; In addition, the project sales rate of urban investment companies was 1591%, and the overall sales rate was 40%, also a difference of 24 percentage points.
In terms of the year, the start-up rate of land acquisition projects of urban investment companies in 2021 and 2022 has reached about 30%, but the start-up rate of land acquisition projects in 2023 is as low as 74%；From 2021 to 2022, the sales rate of land acquisition projects will be 22% and 15% respectively, but the sales rate of land acquisition projects in 2023 will only be 354%。
Compared with other types of land acquisition projects of real estate enterprises, the total operating rate of central enterprises and local state-owned enterprises reached 6755% and 7647%, and the sales rate reached 6066% and 6629%, much higher than urban investment companies.
3. Wuhan, Chengdu and Nanjing are highly dependent on urban investment, and Beijing urban investment has less than 10% of the land (omitted).
Fourth, Shenzhen Metro, Nanjing Anju and other land acquisition amount are leading, and the land acquisition is mainly located in core cities (omitted).
In 2023, the "support" of urban investment will be tired.
There are significant differences in urban investment development among cities.
In the land market in 2023, the construction area and amount of land acquired by urban investment companies in 22 key cities accounted for 35% and 21% respectively, which shows the importance of urban investment companies in the land auction market. In terms of premium rate, the premium rate of urban investment companies in Shenzhen, Nanjing, Chengdu and other cities is significantly lower than the average premium rate of urban investment in Shenzhen, Nanjing, Chengdu and other cities.
1. In 2023, 35% of the land will be acquired by urban investment companies in 22 cities, and more land will be acquired by urban investment companies in Nanjing and Chengdu (some omitted).
In 2023, urban investment companies will continue to be an important force in the land market in 22 key cities, accounting for 35% and 21% of the total transaction area and value in the 22 key cities, respectively.
In terms of cities, Nanjing, Chengdu, Wuhan and Guangzhou have acquired more than 2 million square meters of land, and 9 cities such as Zhengzhou, Jinan, Tianjin, and Changchun have also acquired more than 1 million square meters of land.
In terms of land acquisition, Nanjing and Chengdu are also leading, with Nanjing Urban Investment Company acquiring 37.2 billion yuan and Chengdu Urban Investment Co., Ltd. acquiring 29.9 billion yuan, far exceeding the scale of investment by urban investment companies in other cities, and Beijing, Guangzhou, Wuhan and Hangzhou urban investment companies have acquired more than 15 billion yuan, ranking in the second echelon.
Second, the operating rate of urban investment in some cities is more than 20% lower than the total operating rate, and there is still a significant gap in operational efficiency (omitted).
Half of the projects that have started in urban investment are from cooperation.
Central state-owned enterprises are "priority".
In order to better study the follow-up development of urban investment land acquisition, we selected 2000+ land participated by urban investment in the past three years as a sample, and found that the proportion of urban investment cooperation in land acquisition and later search for cooperative development accounted for 20% of the total number of land acquisition by urban investment. In addition, in terms of the start-up rate, the start-up rate of land acquisition and development plots by urban investment cooperation is 54%, which is 23 percentage points higher than that of independent land acquisition.
1. The proportion of land acquisition and development cooperation in urban investment is 20%, and the proportion of cooperation in projects that have started in 2023 is nearly half of them.
In the past three years, urban investment and platform companies have mainly assumed the role of "support" in most cities, mainly to maintain the stability of the land market and boost market confidence. However, considering that the "presence" of urban investment in real estate sales in the past ten years is low and its development capacity is weak, cooperative land acquisition and cooperative development have become one of the means of "realization" and "breakthrough" of urban investment.
Compared with the 2000+ land involved in the centralized land supply in the past three years, there are 147% of the land was acquired at the auction stage by the city investment in cooperation with the real estate company. Moreover, compared with the independent land acquisition of urban investment, the premium proportion of cooperative land acquisition is larger. According to CRIC data, in the past three years, the proportion of premium land in the cooperative land acquisition participated by urban investment has reached 38%, which is 26 percentage points higher than the 12% premium proportion of independent land acquisition.
On an annual basis, in 2021, the proportion of urban investment participation in land acquisition was the smallest, only 12% (amplitude), and in 2023, it will be the highest, reaching 20%. On the one hand, the first round of land market in 2021 is still relatively hot, and the participation of urban investment is not high. On the other hand, in 2023, many cities will launch high-quality land plots, and although the overall proportion of urban investment land acquisition will decline, there are still some urban investment companies with development capabilities who choose to jointly acquire land with brand real estate enterprises in core cities.
In addition, the remaining 80% of the land plots independently acquired by urban investment are also looking for cooperative development in the future, but the development willingness and difficulty in finding cooperation are relatively large, and the overall proportion is relatively small, which is also related to the frequent "support" of some urban investment in the non-core areas of core cities. According to CRIC statistics, in the past three years, the proportion of follow-up cooperative development (including agent construction) in the independent land acquisition of urban investment is only 63%。
On the whole, the proportion of cooperation between urban investment and platform companies in centralized land supply (cooperative land acquisition and cooperative development) reached 20% (urban investment participated in land acquisition). However, considering that the enthusiasm for development after the acquisition of land by urban investment is not high, we exclude the undeveloped land, and from the perspective of urban investment participation in land acquisition, and the land that has started construction and started sales, the proportion of cooperative development has reached 34%. In terms of previous years, the proportion of projects that have started in 2023 will be close to 50%, while in 2021 it will only be 32%, which also proves that the ability and willingness of urban investment to develop independently after acquiring land are weak.
Second, the proportion of "urban investment + private enterprises" jointly acquiring land accounts for 30%, and the central state-owned enterprises are the "priority" (omitted) for seeking cooperation
3. The rate of land acquisition and development of urban investment cooperation is 54%, which is 23 percentage points higher than that of independent land acquisition.
In terms of start-up, as described in the first chapter of this article, the overall operating rate of urban investment is the lowest among central enterprises, state-owned enterprises, and private enterprises, with only 25% in the past three years. It is worth noting that there is a significant difference between the rates of cooperative land acquisition and cooperative development and independent land acquisition and development by urban investment cooperation.
According to CRIC statistics, among the 2000+ lands participated by urban investment in the past three years of centralized land supply, the overall start-up rate of land acquisition and development by urban investment cooperation was 54% (the number of plots that have been started in urban investment cooperation projects in the past three years and the total number of land acquired and developed by urban investment cooperation in the past three years), while the start-up rate of land acquired by urban investment independently and without finding a partner was only 21%, a difference of nearly 23 percentage points.
In 2021, the highest start-up rate reached 72%, which was 48 percentage points higher than the start-up rate of land acquired by Chengtou independently and without finding a partner.
It can be seen that the willingness of urban investment to develop independently is not high, and it is difficult to find cooperative development of some plots due to their own location and "bottom-up" attributes. On the other hand, the cooperative plots and projects, driven by brand real estate enterprises and the "halo" of some high-quality plots, are higher in both the start-up rate and the start-up time. In urban investment cooperation projects, more than 40% have been sold, while only 13% have been sold for independent land.
Among the joint land acquisitions that have started, the combination of central state-owned enterprises, private enterprises and urban investment accounts for 36%, while the combination of urban investment and urban investment accounts for 28%, which also reflects the higher efficiency of construction with central state-owned enterprises.
It can also be seen from the cooperation of different types of enterprises to acquire land, the start-up rate of "urban investment + central state-owned enterprises" (urban investment + central state-owned enterprises to start the construction of land urban investment + central state-owned enterprises to jointly acquire the total land plot) reached 62%, accounting for the highest proportion, the combination of urban investment and urban investment The combined operating rate of urban investment is the lowest, 33%, but it is 10 percentage points higher than the overall operating rate of urban investment. On the other hand, most of the land acquisitions started by urban investment and urban investment are concentrated in Shanghai, Beijing and some strong second-tier cities. For example, in the third quarter of 2022, the Jinnanwen (hanging) No. 2022-008 plot in Nankai District, Tianjin, was jointly acquired by Shanxi Construction Investment City Operation Group, Shanxi Construction Engineering Group, Shanxi Sanjian Group, Shanxi Wujian Group, and opened in April 2023, with a total transaction amount of more than 1.2 billion yuan and a unit price of 50,000 square meters, and the sales proceeds have been able to cover the land cost.
In the independent land acquisition of urban investment, some of them have started to find cooperation and build on behalf of others after acquiring land, so the overall construction speed is not as fast as that of "urban investment +" joint land acquisition. On the whole, the start-up rate of independent land acquisition by urban investment (the number of land plots independently acquired by urban investment (including follow-up cooperation) and the number of land plots independently acquired by urban investment and independent land acquisition by urban investment are 21%. The start-up rate was 74% after independently acquiring land to find cooperation in construction.
There are many urban investment cooperation projects in Wuxi, Suzhou and Qingdao.
Downtown projects are easier to achieve.
From the perspective of the distribution of cooperative projects, Wuxi, Suzhou and Qingdao have the highest number of urban investment cooperation projects, while Beijing has a larger proportion of urban investment projects than other cities. In terms of specific distribution, the proportion of cooperation between urban projects is higher than that of suburban projects, which shows that projects with better location advantages are more likely to find partners.
1. Wuxi, Suzhou and Qingdao have the largest number of cooperative projects, and Beijing has the highest proportion of urban investment projects (omitted).
Second, the proportion of cooperation in urban land plots is higher, and there is more cooperation in projects in the suburbs of Xiamen and Wuxi.
According to the location of all the cooperative projects of urban investment companies, 52% of the projects are located in the urban area and 48% are located in the suburbs, and there is no significant difference in the overall distribution.
At the city level, the cooperative projects in Hefei, Changchun and Zhengzhou are all located in urban areas, but mainly because the centralized land supply areas of these cities are limited to urban areas and are affected by the statistical scope. In addition, more than 70% of the projects in Changsha, Suzhou, Nanjing, Chongqing, Jinan and Wuhan are located in urban areas, while only 30% are located in suburbs. On the contrary, the proportion of cooperation projects in Xiamen, Tianjin, Shanghai, Ningbo and other cities is located in urban areas is less than 20%.
From another point of view, calculating the proportion of cooperation between urban and suburban land acquisition projects, it can be clearly seen that the proportion of cooperation in urban land plots is higher in most cities, that is, it is easier to find partners for plots with more obvious locations, especially in Nanjing, Changsha, Suzhou and Beijing, where the proportion of urban land cooperation is more than 30 percentage points higher than that of suburban plots.
On the contrary, the proportion of cooperation in the suburbs of individual cities is higher, such as Xiamen, Wuxi, Fuzhou, Shenzhen, etc. Taking Xiamen as an example, there is a shortage of land on Xiamen Island, which is basically won by state-owned enterprises such as Xiamen International Trade and Xiamen C&D.
Another typical city such as Wuxi, Wuxi urban investment involved in the land acquisition project, the proportion of urban project cooperation is 53%, but the proportion of suburban project cooperation is as high as 70%, most of the cooperation projects in the land acquisition link has shown a joint land acquisition situation, and there is no lack of "urban investment + urban investment" model of joint land acquisition.
Summary. To sum up, urban investment is an important subject in maintaining the stability of the land market in the past three years, and it is also the new normal in the process of clearing and adjusting the downward cycle of the industry. On the one hand, the development capacity is weak and the willingness to develop is low, on the other hand, in terms of capital, the debt pressure of urban investment is not small for real estate enterprises. In addition, the location of some of the underpinning land is not ideal, and it is difficult to find suitable partners in the short term. For the way out of the future urban investment land acquisition, we believe that independent development is only suitable for a small number of urban investment with the best experience, and most urban investment still need to revitalize assets, and need to actively look for opportunities such as cooperative development, agent construction, and transfer.
First, the ability and experience advantages of urban investment are relatively insufficient, and the debt pressure is still a hard injury.
As a new subject to maintain the stability of the land market in the past three years, urban investment has two problems that need to be solved urgently in front of urban investment enterprises after the continuous support of centralized land supply:
First, the development capacity is weak, and the advantages of urban investment in the development of real estate projects are relatively insufficient. Compared with traditional real estate enterprises, urban investment has certain shortcomings in development, construction and project management, and some urban investment companies do not have experience in project construction management and sales. In the past market upcycle, some urban investment companies were able to achieve certain results in the local market by relying on cooperation or even independence, but in the downward cycle, under the new pattern with product strength as the core, it is still quite difficult for urban investment to develop independently. Even if the land plots taken by the urban investment still have a certain profit margin, counting various land and financial costs, they are in the current situation of "profit" but "delay".
Second, the pressure on capital and debt should not be underestimated. In fact, the debt pressure of urban investment is not smaller than that of real estate enterprises, and even some urban investment has defaulted, most of which only take land but do not develop, and the funds and land are not really operational, which boosts the debt risk of urban investment itself. Since 2019, the total interest-bearing liabilities and total equity of real estate-related urban investment enterprises have begun to increase year by year, from 8,025.8 billion yuan to 121194 billion yuan in 2022. Total equity also increased from 8,302.1 billion yuan to 114313 billion yuan. In contrast, its monetary funds increased from 1,801.4 billion yuan in 2019 to 2,017.3 billion yuan in 2021, and then fell back to 1,850.4 billion yuan in 2022. As a result, the weighted average net debt ratio of real estate-related urban investment enterprises has continued to rise since 2019 and has reached 89 in 202283%。At the same time, the cash short-term debt ratio of these companies has also continued to decline, from 096 down to 058。In addition, since urban investment debt includes bank loans and non-standard borrowings (including trust financing, fixed financing, financial lease loans, etc.) in addition to standard bonds, the off-balance sheet guarantees of urban investment enterprises are still not reflected in their net debt ratio and cash short-term debt ratio. According to the bond annual report disclosed by the enterprise, the balance of external guarantees of 339 real estate-related urban investment enterprises in 2022 totaled about 1,551.4 billion yuan. If it is included in the total interest-bearing liabilities, the weighted average net gearing ratio of these companies will rise to 103 in 20224%, a direct increase of nearly 14 percentage points. A large number of external guarantees have also affected the liquidity of enterprises to a certain extent, and some enterprises have a liquidity crisis even if they have financial support.
2. Pay attention to opportunities such as cooperation, transfer, and agency construction, and revitalize project assets to resolve debt pressure.
The large amount of land stock and the risky debt have reduced the possibility of urban investment in the land market. So what should be done with the land in the hands of the city pitchers? We see three directions and opportunities. First of all, to find partners for joint development, from the previous situation of urban investment land, urban investment and local private enterprises, large central state-owned enterprises to cooperate more, but the threshold is relatively high, in terms of the current market downturn, can not fundamentally resolve the current internal risks of urban investment, but for some of the private enterprises and even state-owned enterprises that still want to intervene in the centralized land supply, it is also an opportunity to replenish the value of goods; The second is agent construction, due to the lack of urban investment development capacity, it is necessary to find a powerful and reputable agent builder. From the perspective of the overall scale and strength of the agent construction, the range of enterprises that can be selected is less, and the advantages of Bluetown, Greentown, China Resources, Gemdale, and China Merchants are obvious. Finally, it is to transfer the project to another enterprise. It can not only reduce its own debt pressure, but also reduce its own debt pressure, and there is almost no threshold, as long as there are developers willing to take over, the range of choices is larger. It is inevitable that there will be a certain discount in the transfer process, which is still a "leakage" opportunity for some high-quality land plots for some enterprises with limited funds.
For local governments, it is necessary to return to the root cause of debt in the future, and it is necessary to revitalize its project assets, continuously improve its operating conditions, and increase profitability. On the one hand, local governments can re-divide and integrate various business sectors, improve operational efficiency, reduce costs and increase efficiency, and continuously improve the professional and refined operation of various business sectors. On the other hand, real estate-related urban investment enterprises without brand endorsement can actively seek partners for joint development, or find brand builders to build on behalf of them, so as to speed up the carry-over speed and cash return of their projects. In fact, when it comes to debt, the most important thing is the return on assets, which is about future profitability, not the debt itself.
Finally, the long-standing existence of urban investment enterprises has greatly promoted the urbanization of various localities, and the purpose of urbanization is to attract more enterprises and consumers. The existence of urban investment enterprises is a means rather than an end, and in the future, local governments still need to find ways to stimulate all kinds of economies, realize the steady operation of the economy, and use increased tax revenues to repay debts. Only if the economy of the future can continue to move forward healthily can the long-term debt problem be solved. (*Kerry).
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Article**: Kerry