Central Enterprises To Test The Water Affordable Housing Caused Real Estate Regulation Worry

May 5th, CITIC new town, Yizhuang, Beijing

"In the field of affordable housing construction, the central enterprises should shoulder more responsibilities and obligations."

Li Kang, chairman of CITIC Real Estate Limited by Share Ltd, said on the same day.

Recently, the State Council SASAC issued a notice, which is related to 78 non related departments last year.

Central enterprises frequently "test the water" affordable housing

The above-mentioned SASAC documents put forward that all central enterprises should further increase their investment in the development and construction of affordable housing, participate in the development and construction of affordable housing through various channels, and give play to the backbone and leading role of the central enterprises.

According to the "12th Five-Year plan" outline, China will build 36 million new affordable housing in the next 5 years.

According to this figure, the total investment in China's affordable housing construction in the past 5 years is about 5 trillion yuan.

Jiang Wei, Deputy Secretary General of the national real estate managers association, said.

In fact, in recent years, central enterprises have always been the main force in the field of affordable housing construction. In 2010, China Metallurgical Industry added 24 new affordable housing projects, with a total investment of 25 billion 700 million yuan and a total construction area of 5 million 640 thousand square meters. As at the end of 2010, the total scale of China's construction participation in affordable housing reached 11 million 550 thousand square meters, and Poly Real estate also planned to add more than 5 affordable housing projects in 2011.

The SASAC has told the media that the central enterprises have accounted for 13% of the total sales of such houses in China.

"In this field, the central enterprises have strong comprehensive advantages: they can integrate resources better, make overall planning for land, ensure the quality of construction, improve the living environment, and promote the orderly development of regional economy."

Li Kang said.

According to the data released by the Ministry of housing, the construction of affordable housing in China will reach 10 million sets in 2011.

To achieve this goal, the cost will be between 1 trillion and 300 billion yuan and 1 trillion and 400 billion yuan, of which nearly 1/3 will be raised by the central government and provincial governments and city and county governments through various channels.

"We can see that ensuring adequate capital input is the key to achieving this goal.

Central enterprises to invest in the construction of affordable housing is conducive to resolving the funding gap.

For example, CITIC Real estate can rely on the diversified financial platform of CITIC Group and adopt various financing methods such as trust, fund and so on to meet the needs of construction funds.

Li Kang said.

Li Kang believes that professional real estate development enterprises or large central enterprises have more advantages in design, construction, management and brand. They can not only control costs, but also control quality and build homes for households.

Jiang Wei analysis, the central enterprises to enter the market, can really alleviate the government's "tight" situation, "this is a win-win process.

With the current tightening of credit, the liquidation of local financing platforms and the restriction of local purchase policies, central enterprises are likely to play a more important role in the affordable housing market.

How to balance profits and responsibilities

At present, it is in the critical period of property market regulation.

With the dual advantage of land and capital, the central enterprises will show their attention to the real estate market.

"This is actually a test of how an enterprise can choose between profit targets and social responsibilities.

How to participate in the construction of affordable housing profits, and whether the central enterprises will take the opportunity to "get the land" is the focus of attention.

Jiang Wei said.

At present, there is still much controversy over the profit calculation of affordable housing in the industry.

Guo Du securities reports that indemnificatory housing construction is difficult due to management, construction and operation. The repayment rate is guaranteed. Gross margin is generally 10%, which is an important part of quality orders.

But there is also a view that 10% of the profits are targeted at enterprises with the "real estate industry chain".

For the vast majority of enterprises entering the market with investment status, the profit of each independent link should be between 2%~3%.

Some enterprises said that the realization of profitability of the indemnificatory housing construction was "very difficult": the COSCO Group responsible person had said that the group had not made any profit in the previous projects, and Pauli real estate, a subsidiary of Poly Group, had said that the construction of affordable housing was "difficult to make profits".

"Participating enterprises will indeed face the problem of how to grasp economic benefits. There are also some enterprises that make up for the loss of affordable housing through commercial housing profits.

But I think that this part of the housing source has low profit, but at the same time the risk is also small, generally speaking, it can achieve about 3% of the profits.

Jiang Wei said.

Take Beijing area as an example: in May 4th, the first batch of planned land supply data released by Beijing Land Bureau showed that the amount of affordable housing for the first batch of residential land was 65%.

This means that the construction of affordable housing gradually occupies a more important position.

It is understood that the construction project of the security house in CITIC new town in Yizhuang is also the first attempt of the enterprise in the Beijing area.

In 2007, CITIC Real Estate completed the construction task of 360 thousand square meters of resettlement housing in the overall construction of Yizhuang project. At that time, more than 2800 households were rehoused.

The construction project will provide 1498 sets of affordable housing. As of early April, 80 thousand square meters of housing selection has been completed.

Li Kang said.

"As the government and enterprises pay more attention to this field, it is necessary for the relevant departments to explore more systems, and to turn the participation of enterprises into a continuous force."

Jiang Wei said.

Regulation still needs more effort.

The notice issued by the SASAC requires five types of central enterprises to take an active part in the construction of affordable housing, including real estate development, survey and design, engineering construction, building materials and mining enterprises.

This raises the public's concern: will the regulation become an excuse for the central enterprises to return to the real estate market, which will lead to real estate regulation?

Regarding this, Bai Ying, deputy director of the SASAC planning and Development Bureau, has publicly stated that participating in the construction of affordable housing will not slow down the pace of the withdrawal of real estate by the central enterprises of the non real estate industry.

In addition, the SASAC will also issue documents in the second half of the year to regulate the supervision of overseas assets of central enterprises.

"In this field, how to implement the policies of the state to regulate the healthy development of real estate, ensure the design of housing units and the quality of projects, and do well in the construction of related supporting facilities, still need the relevant departments to intensify supervision."

Jiang Wei said.

It is understood that the SASAC's position has been very clear: real estate development enterprises should seize the opportunity to introduce preferential policies in various areas such as affordable housing land supply, investment subsidies, financial discount, financing, taxes and other aspects, and combine the affordable housing with commercial real estate development.

The government work report and the "12th Five-Year plan" show that in the next 5 years, 50% to 70% of our land supply will be used for affordable housing development.

In the next two years, 10 million sets of construction have been built, so that the coverage of affordable housing reaches 20%.

SASAC related staff said that as more and more housing enterprises to increase the participation of indemnificatory housing construction, it will play a role in easing the difficulties of the real estate market, and the central enterprises will also become a major trend in this area.

"In the face of such a huge market, we still need to further establish a sound system and strictly restrict applicable objects.

For example, after drawing lessons from Hongkong and other places, it is easy to see that the development process of affordable housing is also a process of establishing and perfecting laws and regulations.

I think we can formulate different levels of affordable housing applicable objects of economic income and per capita living space standards, to ensure that different levels of housing supply to different conditions of the family.

Li Kang said.