China’s annual new urban population has gradually declined
In 2021, China’s urbanization rate has reached 64.89%, and the annual new urban population will fall below 20 million in 2019. Affected by the epidemic, the number of new urban population in 2021 fell sharply to 12.03 million. The new urban population is the core demand of the new residential housing market. The operation and management ideas of real estate enterprises need to be adjusted according to the future trend of new urban population.
After the development of regional urbanization reaches a certain stage, further breakthroughs need strong population support. According to the historical recovery, Japan still experienced 20 years of rapid population flow and agglomeration after the urbanization rate reached 63% in 1960. During this period, the did rate, an index to measure the level of population agglomeration, increased from 43.7% to 59.7%. From its nearly 60 years of development experience, it is difficult to continue to improve after the regional urbanization level (population agglomeration level) reaches a certain level. Only regional urbanization with sustained population inflow can further develop, and urbanization development in different regions will be significantly differentiated. Considering the comparative relationship between did rate and urbanization rate, the dividing line of urbanization development in Japan may be between 60% – 70% urbanization rate. The United States also shows a similar law of urbanization development as Japan. The overall urbanization rate of the United States reached 64% in 1950, and the urbanization development level of each state also showed obvious differences by 2010. From the numerical point of view, the improvement degree of urbanization rate from 1950 to 2010 is highly related to the population growth rate in the same period.
China will enter the stage of rapid differentiation of urbanization development. In the future, the new housing market is mainly in the core urban agglomeration. In the past, due to the pursuit of economic development, economic growth was the core assessment index of administrative regions at all levels, so all local governments have the power to vigorously develop the local economy, which also makes the development model of small and medium-sized cities in China more homogeneous and the development of urbanization relatively balanced. At present, the top level thinking has gradually changed from balanced development to city group strategy, and the registered residence policy which has the greatest restriction on free movement of population has been relaxed since 2014. China’s urbanization will be further concentrated or differentiated to the current level of urbanization in combination with China’s experience of rapid urbanization. The 19 urban agglomerations under the national key planning include 72 cities with a population of more than 5 million. From the perspective of new house sales in 2020, the total sales area of these 72 cities with a population of more than 5 million reached 900 million square meters, accounting for 50% of the country, and the total sales amount was 11.6 trillion, accounting for 64%. Considering the further agglomeration of population in the future, we believe that the long-term demand space of this part of the market has strong stability.
Investment advice
China may enter the stage of accelerated differentiation of urbanization development, and the new housing market will further concentrate on key urban agglomerations in the future. This round of supply side reform has reshaped the business model of real estate enterprises and the market pattern of short-term key urban agglomeration to a certain extent. In the past, real estate enterprises with excellent operation and management ability and stable financial style have stronger table expansion ability under the restriction of strong leverage management, which is expected to achieve long-term market share improvement and value growth. Beneficiary objects: (1) Poly Developments And Holdings Group Co.Ltd(600048) , China overseas development, China Resources Land, China Vanke Co.Ltd(000002) , Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Xuhui holdings and other steady leaders occupying a high market share in the core urban agglomeration; (2) Hangzhou Binjiang Real Estate Group Co.Ltd(002244) , Yuexiu real estate, Xiamen C&D Inc(600153) and other regional high-quality real estate enterprises deeply cultivating the core urban agglomeration.
Risk tip: the real estate regulation policy continues to be significantly tightened; The real estate credit policy continued to tighten.
