In early 2011, the real estate industry was once a high-margin industry with an average industry profit rate of 36%, second only to food and beverages. "Daily Economic News" reporter once reported that the sale price of some real estates even reached 80 times the floor price of the building at that time. And after a year, the high profit trend of the entire industry may have been reversed. A number of real estate companies acknowledged in various forums that the era of high-margin real estate industry has ended.

At present, how high is the profit rate of the entire industry? A report from Shanxi Securities disclosed that according to estimates, in 2011, along with rising financing costs and loosening housing prices, some experts pointed out that real estate industry profits will be eroded by nearly 10%. Shanxi Securities further pointed out that if property prices generally decline by 15%, while other factors remain stable, the gross margin of the real estate industry will drop to 26.5%, which will be the lowest level in the past five years.

The decline in the overall industry profit margin seems to be an indisputable fact. However, whether the above-mentioned decline in the rate of profit is only temporary or a medium-to-long-term trend? Under the background of the declining profits of the entire industry, have there been any contradictory increases in the profitability of projects and enterprises? What is the actual trend of the real estate industry's profit rate this year? Will the decline in profit margins worsen the real estate industry, which is already extremely tight with capital?

"Daily Economic News" has conducted a survey on the current industry profitability.

Under the regulation of real estate, the projects with rising costs are not only related to the promotion costs and management costs brought about by the increase in sales difficulty, but also the financing costs.

High financing costs Recently, Poly Real Estate released "2011 Annual Results Express" of Poly Real Estate (Group) Co., Ltd., which shows that in 2011, the company achieved operating income of approximately 47 billion yuan, an increase of 31.02% year-on-year; net profit attributable to shareholders of listed companies About 6.5 billion yuan, an increase of 32.39%.

Orient Securities researcher Yang Guohua pointed out in his short review of the performance bulletin that in 2011 Poly Real Estate's overall profit still maintained a relatively high growth rate, but 2011 net profit was “slightly less than our forecast of about 5%”. "It may be that during the period of 2011, the cost rose compared to 2010 and therefore eroded some of the net profit."

Yang Guohua further explained that from the third quarter of 2011, Poly Real Estate's sales and management expenses accounted for 5.7% of the company's operating income, which was an increase of 1.9 percentage points from 2010; sales and administrative expenses accounted for 2.19% of sales. %, an increase of 0.11 percentage point from 2010. Obviously, the rigidity of management fees and the increase in the difficulty of sales have increased the cost of housing enterprises and erode the profitability of housing enterprises.

Previously, housing company financing mainly came from bank development loans and mortgage loans, as well as a certain amount of direct financing in the securities market. Since the current round of real estate regulation and control represented by restrictions on purchases and limited loans, the financing structure of housing companies has changed, and both real estate development loans and personal mortgage loans have fallen sharply, and there is a tendency for declines to continue to widen. In comparison, the growth rate of self-raised funds by housing enterprises began to increase, and they remained stable at a high level.

The statistics released by the National Bureau of Statistics show that in 2011, the source of capital for housing enterprises was 8324.6 billion yuan this year, an increase of 14.1% over the previous year. The amount of domestic loans was basically the same as that of the previous year, and the amount of self-raised funds increased by 28%.

It is worth noting that the "Daily Economic News" reporter summarized the data released by the National Bureau of Statistics on the use of capital by housing enterprises in various years and found that the rate of capital leverage of housing enterprises in 2011 was 5 years since 2007 (source of funds). The ratio of volume to self-raised funds was the lowest, at 2.44 times, compared with 3.18, 2.53, 3.19, and 2.71 times from 2007 to 2010, respectively.

An anonymous executive at the Panhai Construction Department told the reporter of the “Daily Economic News” that the further deleveraging of the leverage ratio of the housing enterprises’ funds meant that the pressure on the self-financing of the housing enterprises was continuously superimposed, and the housing prices were rising. In self-raised funds, under the tightening of credit, the proportion of high-cost funds such as trust financing and private lending has risen.

Take, for example, the main forms of real estate trusts and private lending that are financed by housing enterprises. Chen Jinsong, chairman of World Union Real Estate, pointed out that in 2010, the country issued 3.6 trillion yuan in trusts, and 4 trillion yuan was issued in the first half of 2011, which is more than the total amount in 2010. One third of them are financial products of banks, 2/3 For real estate. In addition, nearly 2 trillion yuan of private lending entered the real estate industry in 2011.

Guotai Junan statistics show that real estate trust funds generally have an annual return rate of 15% to 20%, which is much higher than bank loans, which greatly increases the financing costs of housing companies and at the same time reduces the profitability of housing enterprises.

The downward adjustment of housing prices under the control of the profit margin real estate, and the rising cost of financing squeezed the profitability of the housing enterprises. On the other hand, the downside of housing prices further reduced the profitability of housing enterprises.

According to statistics released by the National Bureau of Statistics, in November 2011, the number of cities with 70 cities falling in house prices in the 70 large and medium-sized cities across the country reached 49, accounting for a ratio of 70%. This phenomenon is generally regarded by the industry as a temporary step in house prices. Enter the important symbol of the "time of falling".

At the market level, due to market pressure, Vanke, Longhu, Poly real estate and other housing prices are setting off wave after wave of price promotions to grab grain.

Wang Shitai, a real estate commentator, believes that under tight real estate control, housing prices have been squeezed to a certain extent by the squeeze of housing prices and rising financing costs. The squeeze rate is about 10%.

However, the anonymity of the executives of the trans-ocean construction analysis of this, said that in 2011 the large-scale price reductions of housing enterprises occurred mainly in the end of the two months. According to the general rules of financial settlement, a project can enter the financial settlement process only after it is handed over to the building. A real estate project from the sale to the exchange, generally has a one-and-a-half to two-year interval period, so the sales data of 2011 housing prices accounted for is basically a good market sales data in 2009 and 2010, and 2011 The sales data, especially the sales data at the end of 2011, generally need to be reflected in the 2012 and 2013 financial statements. Therefore, some of the relatively lower sales of margins resulting from price reduction promotions at the end of 2011 may not be reflected in the 2011 annual report.

An executive at Longhu reported to the reporter of the “Daily Economic News” that according to the settlement procedures of the housing enterprises and the projects sold by the housing enterprises in 2011, the land acquisition time is generally before 2009, which means that the project has land cost. Advantages, therefore, the profit rate of housing enterprises will not fall too much, and will remain at a high level of operation.

The survey data of a housing company provided strong evidence for this. The report investigated the financial data of 30 housing enterprises in the first 11 months of 2011 and found that the average gross profit rate of the 30 housing companies on the list was 42.73%, an increase of 4.47% over 2010; the average net profit rate was 28.91%. It was 8.42% higher than that in 2010. Among them, the number of housing enterprises with a gross profit margin of more than 50% was 5, one more than the same period of 2010. There were 13 houses with gross profit margins ranging from 40% to 50%, 5 more than the same period in 2010.

The decline in profits or the mid-year report shows that the overall industry profit decline in 2011 may be reflected in the 2012 mid-year report.

Longhu executives explained that the current number of large-scale housing companies, the company's land reserves generally take 2 years to 3 years as a cycle. According to the calculation of the land reserve period, real estate projects sold by real estate companies in 2012, under normal circumstances, land acquisition time for most of the land is after 2009, and after 2009, with the soaring house prices, land prices have soared. After the projects on these lands enter the market for sale, the land cost of the project will greatly erode the profitability of the project.

It is worth noting that the relevant sales data of housing enterprises in 2011 will be gradually settled into related financial reports of 2012 housing enterprises. Due to the increase in promotion costs and financing costs and the decline in house prices, these sales data will be included in the financial report. Low-margin profitability.

Qin Lihong, executive director and chief marketing officer of Longhu Real Estate, also believes that the current net profit rate of first-line housing enterprises is about 15%. If these real estates sold in 3%, 5%, and 8% of net profit margins enter the settlement channel in 2012, they will further reduce the net profit rate of housing enterprises to around 10%.

The industry expects that the sales data for 2011 will be reflected from the 2012 interim report, and the centralized response period will be in the 2012 annual report and the related financial statements of 2013 housing enterprises.

/ Housing differentiation /

Some housing companies are still seeing high profit growth or more market trends. Although institutional data shows that the profits of real estate companies will “evaporate” by 10% to 15% in 2011, and may drop to the lowest level in five years, some housing companies with rational layout or high turnover are still in a depressed market environment. Get good income. China Investment’s forecast shows that in 2011, Vanke’s operating income and net profit may reach RMB 65.928 billion and RMB 9.797 billion respectively. Based on this calculation, its profit rate last year will increase slightly compared to 14.3% in 2010, except for Vanke. , Evergrande, Poly Real Estate, Sunac China and other housing prices in 2011 also maintained rapid growth.

The differentiation of the real estate market pattern in 2011 has become increasingly evident. Between the speed of turnover and quality profits, the housing enterprises are still looking for their own balance.

The profit of some housing enterprises still rises against the market. Vanke's 2011 performance data released a few days ago shows that in 2011, Vanke achieved a sales area of ​​10.753 million square meters, and realized a sales amount of 121.54 billion yuan, an increase of 19.8% and 12.4% year-on-year respectively.

Public statistics show that in 2011, Vanke accounted for 88% of the following 144 square meters, and this ratio reached 91% in the fourth quarter.

Although China Vanke did not disclose its profit growth during the year when it announced its annual sales results, according to some institutional analysis data, Vanke's net profit last year maintained a rapid growth. China Investment’s forecast shows that in 2011, Vanke’s operating income and net profit may reach RMB 65.928 billion and RMB 9.797 billion respectively. Based on this, its net profit rate will reach 14.8% last year, which is an increase from 14.3% in 2010. ; Poly Real Estate recently released performance results show that in 2011 Poly Real Estate achieved operating income of 47.027 billion yuan, an increase of 31.02%. Based on this calculation, Poly Real Estate's net profit rate last year was 13.8%, which was slightly higher than the 13.7% in 2010.

According to the data provided by China Investment Securities, Poly has taken the initiative to increase the proportion of small and medium-sized units at the beginning of last year, while the proportion of large units with a floor space of over 144 square meters has dropped by 10% to 20%.

In addition to the above two housing companies, the outstanding performance in 2011 also includes Evergrande and Sunac China.

Public statistics show that in 2011, Evergrande's annual sales reached 80.39 billion yuan, an increase of 59.4% year-on-year; as of December 31, 2011, Sunac China's annual contract sales amounted to 19.2 billion yuan, an increase of 130%.

The high turnover was even better, according to the "China's real estate companies' annual sales TOP50 ranking" published by China Real Estate Information Group and the China Real Estate Assessment Center. Among the top 20 real estate companies, except for 2 that did not publish the 2011 sales target. Out of the housing prices, only eight companies completed their annual tasks. It can be seen that half of the housing enterprises did not complete their annual sales targets.

CRI C analysis pointed out that the market structure of the housing market has been very different, but overall, the performance of some housing companies pursuing a high turnover strategy is more eye-catching.

As can be seen from the top ranking housing companies, Vanke, Evergrande and others are all known for their high turnover. The performance of these housing companies in terms of profitability is also very prominent, and profits have maintained a certain degree of growth.

The foregoing analysis shows that both Vanke and Poly have reduced the proportion of large-sized units last year, increasing the proportion of small- and medium-sized units; Evergrande has been devoting to the development of second- and third-tier cities in recent years, and its 2011 interim data show Among the 101 cities in which they are stationed, second-tier cities and third-tier cities have 24 and 74 respectively. In terms of project layout, first-tier cities only accounted for 3.3%, while second and third-tier cities accounted for 96.7%.

The relevant analysis pointed out that from the comparison of land prices and rising house prices in second-tier and third-tier cities, the cost of land acquisition for housing enterprises in the second- and third-tier cities was generally low. However, in the past two years, housing prices in second- and third-tier cities have increased. The rate is higher than that of the first-tier cities. It is not difficult to see from the two comparisons that the profits of these housing enterprises are considerable.

Han Shitong, a real estate expert, believes that in the second and third tier cities, the layout can achieve the advantages of cost control and achieve rapid sales of rapid payment, which is also a strategy for the pursuit of high turnover.

According to CRI C's analysis, under the circumstances of tight credit and high cost of capital this year, high turnover has obviously become the target of all housing enterprises. Fast-forward and fast-out increases efficiency and this model has greater room for survival.

The game of growth strategy is not difficult to see from the above analysis. Under the circumstances that regulation and control continue to deepen, companies with high turnover are no doubt more in line with market trends, and some high-quality, high-margin housing companies are struggling.

Taking Greentown and SOHO China as examples, according to Greentown's 2011 interim report, in the first half of 2011, Greentown’s net gearing ratio climbed from 132% at the end of the previous year to 163.2%. The debt ratio is much higher than other housing companies, and in 2008, Greentown also faces the same financial difficulties. The Jingwei Research Center pointed out the reasons for this analysis. In addition to Greentown's focus on the creation and high pricing of luxury properties, the constant financing and continuous acquisition of this rapid expansion model also pose a severe challenge to the company's capital chain.

In addition, in the first 11 months of last year, SOHO China's sales fell 54.62% year-on-year, and the rapid expansion and slowing sales were also major factors constraining its capital chain.

According to CRI C analysis, in terms of development strategy, real estate companies have been looking for a balance between high turnover and quality profits. Quality profitable companies are pursuing higher gross margins and land appreciation premiums caused by project quality. Profits, in the current market environment, have been limited to some extent.

Of course, high turnover will inevitably come at the expense of profitability, but in terms of overall efficiency, the increase in turnover rate makes up for the reduction in profit margins, and the increase is far greater than the decline in the rate of profit, not only reducing the return on net assets. Instead, it speeds up the use of capital and reduces financial risks.

In the industry, the sound profit of housing companies is reduced or is only a temporary phenomenon. Although many people in the industry report that the era of high real estate profitability will never return, on the other hand, many industry insiders interviewed by the reporter of “Daily Economic News” stated that in 2011, The decline in the profits of housing enterprises is only a short-term effect under the control of the property market. Compared with manufacturing and other industries, the era of meager profits in the real estate industry is far from coming. The short-term decline in the profits of listed housing companies began in April 2010, and the control policy showed its effect in the third quarter of 2011.

On January 17, the data released by the National Bureau of Statistics showed that the total investment in real estate development in China was 6.17.4 billion yuan in 2011, a year-on-year growth rate that fell 5.3% from the previous year. The total sales area of ​​commercial housing in the country was 1.099 billion square meters, a year-on-year decrease of 5.7 percentage points.

In December 2011, house prices fell in 52 of the 70 large and medium-sized cities across the country, accounting for more than 70% of the total.

With the decline in housing prices, the performance of leading enterprises in the leading housing enterprises represented by Wanbao Zhaojin has shown signs of slowing down. According to the monthly sales data released by China Vanke, from August to December, China Vanke's sales growth rate continued to decline sequentially.

As a result of the reduction in overall sales volume and the most directly affecting the profitability of housing enterprises, the decline in house prices has also started to affect the decline in the profits of housing enterprises.

In the third quarter of 2011, Gem's net profit was only 1.5363 million yuan, a year-on-year decrease of 98.63%. Such a small amount of net profit is not enough to purchase a set of 60 square meters of ordinary commercial housing in Shenzhen's Guan Neicheng District.

According to the industry net profit disclosed by the third quarterly report of listed real estate companies, 131 A-share listed housing enterprises realized total operating income of 69.958 billion yuan in the third quarter, a decrease of 8.15% from the previous quarter; total net profit was 7.319 billion yuan, a decrease of 29.36% from the previous quarter. There were a total of 77 companies with a net decrease in net profit, accounting for 58.7% of the total.

Because regulation and control of the real estate industry to suppress, real estate profit reduction in the end is a long-term trend, or a short-term market adjustment? In response, Wang Haibin, chief analyst of the World Real Estate Market Research Department, believes that due to restrictions on purchases and price limits and other policies that have suppressed real estate demand and housing prices, the decline in the profits of housing companies is only a temporary phenomenon.

Lin Xiaohua, assistant to general manager of Shenzhen Zhongsha Real Estate, also believes that in the long run, with the intensified competition in the industry, the decline in the overall profits of the real estate industry is inevitable. "Because the impact of regulatory policies on the market will not be eliminated in a year or two, real estate regulation is a long-term process." Lin Xiaohua said.

How far is the era of meager real estate development?

After the gradual increase in land costs, labor costs, and financial costs, most local industry professionals believe that housing companies have bid farewell to the past “profits” and entered the era of meager profits.

In the December 2011 media exchange meeting at Vanke, Yu Liang, the president of Vanke, stated that the real estate industry has entered the second half, and the good days of the past are no longer good enough and will bid farewell to huge profits.

In December 2011, at the annual financial meeting of the National Association of Industrial and Commercial Real Estate Chambers, Lu Yong, Chairman of Haier Real Estate, was even more amazed, suggesting that the real estate industry has long been no more profiteering and has long maintained a meager state of profit.

In the property market, “restriction of purchase, limit price” policy is implemented, and the real-time industry’s institutional policies (such as real estate tax pilots) are fully implemented. Is the real estate meager era really coming?

In this regard, Han Changji, a real estate industry researcher at China Investment Advisors, believes that housing enterprises have a certain special status in China's industry and determine that even if the real estate industry is fully competitive in the market, its profit rate will not drop significantly in the short term.

Han Changji believes that the overall decline in the profits of housing enterprises is not the result of market regulation, and the downward trend generated by the policy regulation is not representative of the industry. At present, the premium for land premiums has been reduced, while the market supply and policy restrictions have been in a highly controlled state. Regulation and control are simply placing prices and supply there. Once the regulation is relaxed, prices will rise again.

In fact, there are many factors that affect the profit of the housing enterprises. The high premium of the land will lead to a sharp drop in the profit rate of the housing enterprises. Lin Xiaohua believes that if the developer takes the land at a high price, his project cost will be very high, and it will be difficult for developers to control the selling price. As a result, the developer’s cost and profit are not the same. "The development of the real estate industry for more than 20 years, it is too early to say that the real estate industry is going down," said Lin Xiaohua.

In the second half of the real estate market, the decline in industry profits due to the adjustment of the housing enterprises is what does this mean for developers?

Needless to say, looking ahead to the development trend of the real estate industry in the future, in addition to the discussion of Yu Liang's “Half-Half”, the real estate industry situation has quietly changed. However, in terms of profit margins, there will be polarization in the short term. Some of the profits of the housing enterprises will be maintained while the other part of the housing prices will decline. This will become a trend.

After analysing the debt ratio and sales scale of the annual report of housing enterprises in the first half of 2011, Han Changji believes that changes in the profitability of housing enterprises have changed the business strategies of housing enterprises, and some housing companies have adopted a diversified profit strategy to avoid the risk of fluctuations in profits. If Jindi enters real estate finance and commercial real estate, Evergrande will enter the cultural industry. Some housing companies have adopted rapid development methods to accelerate the use of funds to increase net assets. For example, in 2011, Vanke, Evergrande, Country Garden, China Shipping, Kaisa and other property companies have chosen fast-turnaround marketing strategies.

Han Changji said that through this round of policy regulation, the real estate industry will have corresponding market changes. First, the small and medium-sized housing enterprises with poor resilience in the real estate industry will be offshore, and the industry concentration rate in the real estate industry will increase steadily.

However, after the merger, whether the housing enterprises can guarantee the stability of the industry profits is still not known.

Han Changji said that the real estate industry's profit decline is not consistent, according to the common characteristics of housing enterprises, due to the market just needed support, as long as the housing companies to give up a certain range of income, housing prices for rigid demand will maintain the return of real estate funds.

Lin Xiaohua also believes that product and marketing strategies can adapt to the changing housing prices of the housing market, and will eventually remain in the merger and elimination process, thereby gaining more market share.

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