Events
The National Bureau of statistics released the real estate development investment and sales data from January to February 2022.
Sales side: the sales of commercial housing was weak from January to February, and the follow-up policies and actions of real estate enterprises will be observed
From January to February 2022, the sales area of commercial housing was – 9.6% year-on-year; The sales amount was – 19.3% year-on-year. Among them, the cumulative amount of residential sales was – 22.1% year-on-year. In terms of price, from January to February 2022, the national average sales price was – 10.75% year-on-year; From the regional dimension, the average sales price in the eastern region still ranks first in the four regions, reaching 14276 yuan / m3. Looking back, the high-frequency transaction area data of 30 large and medium-sized cities from March 2022 to now (as of March 14) show a year-on-year increase of – 48.0%. The downward pressure on sales is the general trend. The trend of short-term decline fluctuation needs to observe the subsequent relaxation of policies and the “price for volume” strength of real estate enterprises.
Commencement and completion: the decline of new construction narrowed, and completion under “guaranteed delivery” is expected to resume growth
From January to February 2022, the new construction was – 12.2% year-on-year, which was better than – 31.1% year-on-year in December 2021. From the perspective of transmission from land acquisition to commencement, there is a time lag of 2 ~ 3Q between land acquisition and sales. Subdivided to the urban level, the “two concentration of land supply” has significantly disturbed the rhythm of land acquisition. According to Kerui’s statistics, from 2019 to 2020, the average time from land acquisition to construction and sale of 22 urban plots with centralized land supply is 3.7 months and 11.5 months respectively; In 2021, after three rounds of centralized land supply, a total of 2111 residential land were sold in 22 cities. As of February 9, 2022, only 21% had been started. Considering the implementation of regulatory policies such as “three red lines” and “real estate loan concentration management”, especially in the control of investment amount, there is an indicator constraint that the land acquisition amount / sales amount of the current year shall not exceed 40%, and the land acquisition attitude of real estate enterprises will become more and more cautious. It is worth noting that the new construction in 2022 will fluctuate accordingly when the land acquisition end lags behind, and the ability of real estate enterprises to actively adjust the construction rhythm may be weakened. Due to the large number of urban investment companies taking land in the second and third rounds of centralized land supply in 2021 (urban investment accounts for 43% of the third batch of land sold according to the number of projects), such projects are more likely to seek the cooperative development of brand real estate enterprises, which is also one of the factors leading to the slowdown of project construction speed. The completed area from January to February was – 9.8% year-on-year. Since the end of 2021, the policy of ensuring delivery intensively issued by the government has gradually come into effect, and the completion in 2022 is expected to resume growth.
The completed amount of real estate development investment turned positive year-on-year, and the contribution of land investment decreased
From January to February 2022, the completed investment in real estate development was + 3.7% year-on-year (2021 + 4.4%), which was significantly improved compared with – 13.9% year-on-year in December 2021. It is noted that the land transaction and construction area from January to February was – 42.3% year-on-year. Considering the implementation of centralized land supply and the differentiation under the “urban implementation strategy”, the land acquisition strategy of real estate enterprises remains conservative, and the hot differentiation between regions of the land market is more obvious. As the main part of development investment, the contribution of land investment to development investment may continue to weaken in the future. In addition, this year’s “government work report” again mentioned new urbanization and orderly promotion of urban renewal. Coupled with the recent promotion of shed reform under the new deal in Zhengzhou, urban renewal is expected to “fill the vacancy” in the future to improve the toughness of real estate development investment.
Financing side: from January to February, the funds in place were – 17.7% year-on-year, and the decline of Chinese loans was – 21.1%
From January to February 2022, the funds in place were – 17.7% year-on-year. Structurally, from January to February, China’s loans (year-on-year – 21.1%), self raised funds (year-on-year – 6.2%), payment collection (down payment + mortgage) (year-on-year – 23.9%) [including personal mortgage (year-on-year – 16.9%) and down payment (year-on-year – 27.0%)]. In terms of proportion, sales collection is still the main source of funds (accounting for 50.6% from January to February). Due to lack of confidence in the current market, consumers’ willingness to buy houses has not increased significantly with the relaxation of policies. It can be confirmed from the statistical data report on the scale of social financing released by the central bank in February: household loans decreased by 336.9 billion yuan, of which medium and long-term loans decreased by 45.9 billion yuan. Looking back, under the guidance of a virtuous circle and policies for urban implementation, and on the basis of ensuring the release of residents’ reasonable purchase demand, the financing end is expected to be repaired.
Investment advice
Following the “three red lines”, the introduction of policies such as “real estate loan concentration management” and “two concentration of land supply” 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. The restriction of supply and demand at both ends of the industry has exacerbated the disharmony between land acquisition, sales and leverage reduction. Suggestions: (1) steady development type: Poly Developments And Holdings Group Co.Ltd(600048) , Vanke A, Gemdale Corporation(600383) ; (2) Growth benefit type: Jinke Property Group Co.Ltd(000656) , Seazen Holdings Co.Ltd(601155) ; (3) Quality objects of property management: Country Garden service, China Resources Vientiane life, 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.
