Since the second half of last year, under the background of obvious downturn in the real estate industry, the growth of revenue and profit scale of real estate enterprises has reached an inflection point and showed a downward trend. At the same time, under the continuous pressure of land acquisition, financing and other operating costs, the profit margin level of the main business of real estate enterprises is also facing downward pressure.
It is worth noting that in recent years, while strengthening their main business, many real estate enterprises have extended their tentacles to diversified fields outside real estate in order to seek new growth points. In addition to the relatively traditional diversified development directions of Commerce, property management, culture and tourism, the field of new consumption with low threshold, high growth and high income (upgrading and innovation in traditional consumption based on new technology and new media) has become one of the investment paths involved by large-scale real estate enterprises.
So, what are the odds of winning in the new consumption field that real estate enterprises are not good at?
“In the context of the current upgrading of supervision in the real estate industry, some investment institutions affiliated to real estate enterprises have stepped up the layout of large consumption and new consumption fields in order to find new profit growth points and obtain considerable returns.” Lin Bo, general manager of Kerry Research Center, analyzed to the reporter of daily economic news that what needs to be vigilant is that the investment industry is risky and there is high uncertainty in stepping into emerging fields. How to identify high growth industries and worthy investment targets? How to exit at the right time? It is still a great challenge for the capital of real estate enterprises.
Why favor new consumption?
On February 8, China Resources Capital announced the signing of a strategic cooperation agreement with the people’s Government of Huangpu District, Shanghai. The two sides plan to set up a large consumption industry fund in Huangpu District as the beginning of cooperation, focusing on new consumption, consumption technology, supply chain logistics and other fields. China Resources Capital said that it will continue to increase investment in large consumption and other fields during the 14th Five Year Plan period in the future.
In fact, in addition to China Resources Capital, many investment institutions with real estate enterprise background have focused on large consumption and new consumption to seek diversified development outside the real estate business.
Kerui report shows that real estate enterprise capital often favors wine, tea, fresh food, pasta, pets and other fields. According to incomplete statistics, from the perspective of consumer brands related to catering and retail, the related investment institutions of real estate enterprises mainly prefer new wine and tea, and up to six brands have been invested, such as Yuanqi forest, berry sweetheart, Baowen famous wine, etc; Popular concepts such as fresh food distribution have also become the focus of investment, such as rabbit shopping, Ding Dong shopping, daily excellent fresh food, fresh food and so on; In addition, the scope of investment also includes pasta catering, community supermarkets, beauty salons, etc., which are closely related to residents’ daily consumption.
At present, among the real estate enterprises investing in large consumption and new consumption, those with large investment scale include country garden venture capital, China Resources Capital, poly capital and Longhu capital, as well as Jinmao capital, ocean capital, Yuexiu industry fund, Gemdale Corporation(600383) , green city China, etc
source: Kerui
From the perspective of layout intention, it is almost the same as the essence of diversification of real estate enterprises. It is mainly to break through the growth bottleneck of main business and create new growth points, but the development logic and entry path are different. In the new real estate industry environment, the cross-border layout of enterprises is no longer straightforward, but tends to be cautious and conservative, and adopts more “circuitous tactics”, that is, interact with the main industry, test the water from meeting their own needs, and strengthen the “carrier” and “enabling” nature of real estate.
In addition, from the perspective of brands related to life services, pet economy is valued by real estate enterprises, such as ruipeng shares invested by Country Garden venture capital and Ruipai pets invested by Yuexiu industry fund; In addition, it also includes indoor amusement, travel photography and logistics, which are the focus of real estate enterprise capital.
“The reason why the relevant investment institutions of real estate enterprises invest in the new consumption field is, to some extent, because the real estate market has been more and more strictly regulated in recent years, and there is downward pressure on the profit margin level and profit growth rate of the main real estate industry.”
Lin Bo told the daily economic news that in this context, investment institutions associated with real estate enterprises contact the current emerging industries through investment, or it is an optional second growth curve.
Opportunity or risk?
Take country garden, a leading real estate enterprise, as an example. Unlike other enterprises involved in the upstream and downstream diversification of real estate, it officially established a venture capital company in 2019 and has performed well in the next few years. Country garden venture capital has invested in more than 90 enterprises, of which 10 have successfully IPO, 26 are Unicorn enterprises and 13 have completed the next round of fund-raising.
“The difference between country garden’s investment method and other real estate enterprises is that it chooses entrepreneurial companies rather than those that are mature and stable. This is like investing in stocks in the secondary market. Although venture capital is risky, it has higher returns, and it also tests a company’s analytical ability, judgment and final decision-making.”
According to Zhang Bo, President of the branch of 58 anjuke Real Estate Research Institute, the diversification of real estate enterprises and financial investment are two concepts. Diversification is the end business of enterprises, such as car making. The financial investment is purely to obtain more profits. For example, some tuyere industries are not highly related to their own industries.
“The first is to get involved in businesses related to their own industry. The advantage of doing so is that it can form an effect of 1 + 1 greater than 2, which is conducive to the upstream and downstream layout of their own real estate business.” Zhang Bo said that this type is the only way for most real estate enterprises to develop to a certain scale, in order to get through the upstream and downstream.
However, Zhang Bo also believes that under the current background of the real estate industry, real estate enterprises should still focus on real estate. In terms of capital, as a capital intensive industry, real estate enterprises have certain advantages in capital. Real estate enterprises entering other emerging industries and changing tracks need to be considered carefully.
In fact, in recent years, due to the impact of cycle adjustment and epidemic, the real estate industry is undergoing a new round of reshuffle. Non real estate enterprises have stripped off real estate business and sold real estate projects. There are not a few cases of cross-border failure of real estate enterprises, which also means that the barriers of the real estate industry have increased and the operation is more difficult. Therefore, for cross-border enterprises against the market, the uncertainty of future development is high. Avoiding radicalization and strengthening cross-border risk control are the first priority.
“The real estate industry is capital oriented. In the downward period of the market, ‘fast’ means greater risks. Cross border layout needs to find matching projects in combination with their own development needs, otherwise there may be associated risks and affect the development of their main business.” Zhang Bo said that the cross-border layout of real estate enterprises has limited growth space in terms of scale and efficiency, and it is particularly important to do a good job in the strategic positioning of the main business in the enterprise.
