Event:
The people’s Bank of China and Bank Of China Limited(601988) Insurance Regulatory Commission issued the notice on the exclusion of affordable rental housing related loans from the concentration management of real estate loans, encouraging banking financial institutions to increase their support for the development of affordable rental housing in accordance with the principles of legal compliance, controllable risk and commercial sustainability.
The implementation of affordable housing policy is accelerated, and it is expected to add 2.4 million units in 2022
In the process of promoting the reform of housing supply side structure, increasing the supply of affordable rental housing is the top priority. The policy system is gradually completed from setting the tone and refinement to promotion, and from the central to the local level. In July 2021, the State Council issued the opinions on accelerating the development of affordable rental housing, which defined the top-level design of the national housing security system for the first time. In November, the Ministry of housing and the Ministry of Finance and other four departments jointly issued a document, clearly stated that during the “14th Five-Year” period, we should vigorously increase the supply of affordable rental housing, and strive to increase the proportion of newly guaranteed housing to 30% of new housing supply. On January 20, 2022, the National Conference on housing and urban and rural construction proposed that in 2022, 2.4 million sets of affordable rental housing will be built and raised throughout the year, focusing on large cities with net population inflow. After the central government set the tone for the development of affordable rental housing, local governments actively responded, refined objectives and followed up the implementation of policies. Zhejiang, Guangdong, Shandong, Hainan and other provinces, as well as Qingdao, Xi’an, Jinhua, Shanghai and other cities have successively issued relevant implementation opinions or exposure drafts. The further implementation of policies and work related to affordable rental housing is an important part of continuing to fully implement the long-term mechanism of the real estate market.
The “binding force” on the supply side is still, which is intended to promote a virtuous circle in the industry
So far, the “three red lines”, “real estate loan concentration management” and “two concentration of land supply” continue to be constrained on the supply side. The targeted relaxation of loan concentration management requirements in this policy is an effective supplement to other capital improvement policies, which does not mean that real estate enterprises break through the restrictions of financing and debt increase. In August 2020, the “three red lines” policy was introduced. In December of the same year, the central bank and the China Banking and Insurance Regulatory Commission issued the notice on establishing the real estate loan concentration management system of banking financial institutions, establishing the real estate loan concentration management system of banking financial institutions, and setting the upper limit of the proportion of real estate loans and individual housing loans in five grades. Since March 2021, the growth rate of China’s personal house purchase loans has slowed down significantly. In 2021, Q1 ~ Q4 personal mortgage loans have changed by + 50.0%, + 6.7%, – 9.5% and + 0.9% year-on-year respectively. In November Q4, due to the reduction of housing loan interest rates in some cities and the acceleration of bank lending, personal mortgage loans increased by + 10.6% month-on-month. In 2021, personal mortgage loans increased by only 8% year-on-year. Then, in September 2021, the central bank issued China’s financial stability report (2021), which supported residents’ reasonable purchase demand and lowered the loan interest rate of the first and second homes. Since November, the supervision of pre-sale funds around the country has been relaxed, and the M & a loan policy has been implemented since December. Many policies have gradually alleviated the fundamental pressure of real estate enterprises, helping to return the real estate market to the residential attribute. The introduction of this policy aims to relax the management requirements of loan concentration, which can reduce the financial pressure of real estate enterprises, increase the financial support for Housing leasing, and maintain the continuity, consistency and stability of real estate financial policies.
The new deal brings new opportunities, and state-owned enterprises may benefit from the development of leasing formats
As an important market participant, the implementation of the policy will further stimulate the enthusiasm of real estate enterprises to enter the field of affordable housing and indirectly benefit the development of other leasing formats. From the perspective of the commercial closed loop of “investment, financing, construction, management and return”, a) financing link: the bank will give a certain preference to the comprehensive projects including affordable rental housing in the loan structure management; b) Development and construction: the policy emphasizes giving corresponding policy preference to land resources and non rent changing projects; c) Operation links: in addition to financial subsidies, we will effectively reduce and exempt value-added tax and real estate tax in order to alleviate the pressure of operation tax; d) Exit link: include affordable rental housing into the pilot scope of public offering REITs, etc.
At the same time, state-owned enterprises are developing rapidly in the housing rental industry. 1) Scale: according to iccra statistics, in 2021, the scale of rental housing managed by state-owned enterprise operators accounted for 10.2%, an increase of 6.4pct compared with 2019, and the management scale in three years increased nearly three times. 2) Number of brands: according to iccra statistics, 34% of the top brands were state-owned enterprises in 2021, an increase of 9pct compared with 2019. The advantages of state-owned enterprises are as follows: a) in terms of land acquisition, self-supporting and construction allocation, state-owned enterprises are in a leading position. According to CRIC statistics, 87.9% of the pure lease plots in 2021 were acquired by local state-owned enterprises; About 56.7% of the land for self owned lease is obtained by state-owned assets. Private enterprises accounted for 43.3%, mostly mainstream real estate enterprises involving housing leasing, such as Longhu, Xuhui and Zhongjun. b) State owned enterprises hold a large number of stocks, which are included in the supply source of affordable rental housing system, and can revitalize assets with the help of policy Dongfeng. There are mainly five feasible paths for the diversified supply of indemnificatory rental housing, involving the construction of rental housing on rental land; The upper limit of the proportion of supporting land for industrial projects in the industrial park has been increased from 7% to 15%; Construction of indemnificatory rental housing for non residential stock land and housing; The existing centralized and decentralized rental apartments in the market are incorporated into the indemnificatory rental housing system; Unsold and vacant houses in traditional indemnificatory housing (non commercial housing). The first two methods belong to the scope of new supply, and the last three belong to the stock included in the indemnificatory rental system. In the previous land acquisition of state-owned enterprises, the proportion of affordable housing is high, so they benefit from the marginal improvement of this policy.
Investment advice
Following the “three red lines”, the introduction of policies such as “concentration management of real estate loans”, “two concentration of land supply” and “pilot reform of real estate tax” will restrict supply and demand in both directions. The regulation of wind direction has not changed, and “stability first” is still the main tone, and the space for large-scale expansion is narrow. At present, the valuation and position of the sector have been at an all-time low. In the future, the low base effect subsided, the fundamentals were under pressure in early 2022, and the supply and demand of the industry were limited, which aggravated the disharmony between land acquisition, sales and leverage reduction. Suggestions: (1) steady development type: Poly Developments And Holdings Group Co.Ltd(600048) , China Vanke Co.Ltd(000002) , Gemdale Corporation(600383) ; (2) Growth benefit type: Jinke Property Group Co.Ltd(000656) , Jiangsu Zhongnan Construction Group Co.Ltd(000961) , Seazen Holdings Co.Ltd(601155) ; (3) High quality objects of property management: China Resources Vientiane life, country garden service, Jinke service, Baolong business, etc.
Risk tips
The real estate regulation policy has become stricter, the sales repair is less than expected, and the capital has been greatly tightened.
