A large number of unfinished buildings appear, and only the fittest can survive in the property market

As the property market enters the stage of structural adjustment, real estate companies are ushering in a new round of differentiation and integration. Each round of reshuffle in the property market is full of challenges for small and medium-sized real estate companies.

Data from the National Bureau of Statistics show that from January to November 2014, the national real estate development enterprises had 11.0115 trillion yuan in funds, a year-on-year increase of 0.6%. In the first November of 2013, this figure was 27% . The growth rate of real estate investment has been declining, the growth rate of funds received by real estate companies has slowed down, and it is becoming increasingly difficult for developers to obtain money.

Since last year, news of broken capital chains of small and medium-sized real estate companies has been revealed almost every once in a while. According to incomplete statistics, as of now, about 30 projects in Chengdu, including Wulong Island Mansion and Madison Square, are at a state of suspension or semi-suspension, and some developers have even committed suicide by jumping off buildings due to a broken capital chain.

With the deterioration of real estate data, a large number of real estate companies are facing the risk of breaking their capital chain, and the phenomenon of "uncompleted buildings" emerges in endlessly. Although there are various reasons for the phenomenon of unfinished buildings, funding problems have become the last straw for developers. Many think tank experts said in interviews with FangWan that the emergence of unfinished buildings is the result of "survival of the fittest" in market competition. When the accelerating land acquisition and financing drama encounters the difficulties of the property market downturn, developers are trapped in financial difficulties. Unable to continue this gamble, "survival of the fittest" is a situation that is likely to happen to real estate companies in the future.

The boss of Wulong Island Mansion has been suspended for many months and died of suspected suicide

Project name: Wulong Island Mansion

Property address: Sanmu Road, Xindu (next to Wulongshan Park)

Project type: Residential

Developer: Sichuan Rongde Investment Co., Ltd.

Time of suspension of work: February 2015

In April this year, it was reported that the Xindu Wulong Shanyu Project had been suspended for many months due to a broken capital chain, and its boss was also suspected of committing suicide.

It is understood that there was no construction activity on this project as early as before the Spring Festival. In addition to the basic construction of the exterior of the project, the internal gardens have not yet begun, and the construction of elevators and curtains on the exterior walls of some buildings have not been completely removed. The company's shareholders have begun to liquidate the project and prepare for the overall sale.

The Wulong Island Mansion project on Mulanshan Road, Xindu District is an asset developed by Sichuan Rongde Investment Co., Ltd. All the company's current assets also include the Rongde Sports and Leisure Plaza on Qingxi East Road, West Second Ring Road, Chengdu, which has been in operation for many years, and the Rongde Villa project on Rongde Road, Dafeng, Xindu District (which has been renamed Fuhuang Villa), while Rongde Sports Plaza and Rongde Villa are both managed by Chengdu Xinyue Company, a subsidiary of Sichuan Rongde Investment Co., Ltd., and both projects are in normal operation. The company's boss, Wang Youliang, has indeed fallen to his death. Moreover, some employees of the company have resigned, and the company is also facing certain asset disputes within the company.

Madison Square on Ertianfu Avenue has been blocked by property owners to defend their rights

Project name: Madison Square

Property address: South section of Tianfu Avenue, Tianfu New District, Chengdu (opposite Polar Ocean Park)

Project type: Complex

Developer: Chengdu Chengnan Star Real Estate Co., Ltd.

Suspension of work Time: May 2015

On May 23, 2015, a group of home buyers blocked the "Madison Square" project to defend their rights.

The project covers an area of ??76 acres, and the entire project has basically been suspended. As early as 2012, the project was nearly topping out. Until now, the engineering scaffolding and dense mesh have not been dismantled.

It is understood that the developer of Madison Square is Chengdu Chengnan Star Real Estate Co., Ltd., and the investor is Chengdu Ruiding Investment Co., Ltd. On the surface, these are two local Chengdu companies.

However, reports indicate that its "hotel segment is managed and built by a well-known five-star hotel in the United States. It is a high-end commercial project built in Chengdu by Deshuhua Fund (Group), one of the world's four largest real estate funds."

According to current data, some of the properties for sale in the project are in a state of being seized or mortgaged, and even the properties that have been sold are also in a state of being seized or mortgaged. In the announcement of the owner group, it was shown that what the owners learned was that "the legal representative of Chengnan Star (project developer) was investigated for illegally absorbing public deposits from other companies, and the land ownership under the name of Chengnan Company was sealed by the court." This incident Still under further investigation, the specific situation has yet to be confirmed.

The shareholders and construction company of Sanjiayuehui have been suspended for many months and have been replaced.

Project name: Jiayuehui

Property address: No. 666, Middle Section of Yizhou Avenue, High-tech Zone (next to China Resources Phoenix City)

Project type: Residential

Developer: Chengdu Jiahuamei Industrial Co., Ltd.< /p>

Construction suspension time: early May 2015

On July 2, 2015, the Jiayuehui project, which had been a hot seller some time ago, was surrounded by more than a dozen people in the sales department. Not far from them, a police car was parked, and several police officers were at the scene to maintain order. Just after 6 p.m., the sales department of the Jiayuehui project was already empty. Except for two or three staff members, all the display racks were empty. In the huge sales department, not a single light was on.

According to information provided by rights defenders on site, the Jiayuehui project was suspended in early May, and several help-seeking banners were hung on the exterior walls of some buildings that were nearing their ceiling.

According to a person in charge of the project of Chengdu Jiahuamei Industrial Co., Ltd., the developer of Jiayuehui, the project was previously stopped due to funding problems. Now the company has replaced a new shareholder "Ya Nan" and the company's business has been temporarily suspended. . The construction company has now been replaced by Huaxi, and we are still negotiating compensation with the other construction company.

The directors of the four quiet residences in Huating were all unfinished and collectively lost contact

Project name: Quiet Residence in Huating< /p>

Property address: No. 111 Beishun Street, Jinjiang District (next to Longzhou Road Primary School)

Project type: Garden house

Developer: Sichuan Foguang Real Estate Co., Ltd.

Construction suspension time: August 2014

In October 2014, it was reported that the Foguang Junting (also known as Jingju Huating) project located on Longzhou Road in Chengdu had been suspended for 2 months. , materials are piled between each building of the building, and various sundries are also piled in the houses of the building.

It is understood that because the person in charge of the developer Sichuan Foguang Real Estate Co., Ltd. has collectively lost contact, the building has not been completed and has been stopped, and the housing has not been delivered for six months overdue, the developer has publicly announced that the capital chain has been broken, and many owners have After trying to contact for the first time without success, hundreds of property owners spontaneously organized to go to the sales department to defend their rights.

More than 60 acres of land in Wubeicheng Central has grown grass and has been suspended for a long time

Project name: North City Central

Property address: Longtansi West Road, Chenghua District, Chengdu

Project type: Complex

Developer: Huayu Group

Construction suspension time: 2013 Early July

It is understood that Huayu Real Estate won a bid for 63.58 acres of land at Niulong Intersection in Longtan Temple Town Area, Chengdu City in January 2013. However, the land has been suspended for more than two years since then. .

According to relevant information, since the land was acquired, not a single tile has been seen in this project, and even the earthwork has not been completed. On the official website of Huayu Real Estate, Beicheng Central is still marked as a "project for sale", but there is only a shallow pit on site. Due to the long-term shutdown, weeds have grown in the shallow pit of more than 60 acres.

Relevant sources from Chengdu Huayu Real Estate said that the company is studying design and construction plans and will start construction in the near future. However, sources said that it was impossible to confirm the time for resumption of work. The resumption of work that was originally agreed upon ended up being nothing.

Industry comments:

Zhang Shuanghong, research director of the Strategic Development Department of Centaline Real Estate: Developers should be cautious when entering unfamiliar development areas

With the economic transformation and industrial structural adjustment, the real estate market has entered a period of "reducing overcapacity", and the emergence of unfinished buildings is the result of "survival of the fittest" in market competition. Since 2014, the number of unfinished projects in Chengdu has continued to increase, but they are mainly large-scale commercial, office and professional markets. The residential market is relatively healthy and there are fewer unfinished projects.

In recent years, there has been a boom in commercial real estate development in Chengdu. In the context of excessive overall development of commercial real estate, market supply exceeds demand, and the deterioration of the project living environment has become the "external cause" of project failure.

Real estate development takes up a lot of funds, has many links, and has a long cycle. In particular, commercial real estate development particularly tests the developer’s financial strength and operational capabilities. The project has many important aspects such as financing, design, positioning, investment promotion, operation, and payment collection. There cannot be any "mistakes" in the process. If there is a deviation in a certain link, the capital chain will be broken and the project will be unfinished.

During the real estate market adjustment period, developers should be cautious when entering unfamiliar development areas such as commercial and industrial real estate. For projects under development, financing channels must be broadened, product positioning must be fully marketed, and professional teams must be hired for investment operations to ensure that all aspects of development are under effective control and that the capital chain is not broken. For unsustainable projects, we actively look for partners or buyers, minimize losses through transfer, and protect the interests of investors.

Associate Professor Liu Lu, School of Economics, Southwestern University of Finance and Economics: Developers should open financing channels and accurately predict the market

The number of "unfinished" real estate projects is indeed related to the macroeconomic environment and the The cycle of the real estate market is very closely related. For example, the real estate market in Hainan and Beihai in the early 1990s is a typical example.

Judging from the current situation, the Chengdu market is far from reaching this level of panic. I prefer to use "the speed of project progress" to describe the current market status: some projects progress faster, and some projects progress slower. But it should be said that there are still very few unfinished projects in an absolute sense.

The slow progress of some projects is mainly due to the downturn of the real estate market, slow sales, slow payment collection, and certain difficulties in paying construction fees. Additionally, every company's situation is different. But I think the two most important factors are cost and cash flow. Costs include many things. Putting aside basic materials, construction and labor, marketing, management and other costs, the biggest differences between real estate companies are the cost of land acquisition and capital costs.

If you acquire land when the land market is booming, the cost of the land will inevitably be very high. Under the pressure of downward market pressure, it will greatly affect corporate profit margins and the sustainability of the project. The differences in capital costs among various real estate companies are mainly reflected in the nature of the company and financing channels. Listed companies can issue additional shares, large companies can issue bonds, and companies with good relationships with banks can obtain bank loans. These are relatively low-cost channels. However, many small and medium-sized real estate companies have to resort to social funds including private loans, and such financing costs are very high.

To avoid project suspension or even difficulty in completing the project, I think we should start from the source, that is, have correct expectations and judgments about the market, and not be impulsive when acquiring land. In addition, of course, we must also pay attention to the risk control of financing and use as few financing channels as possible that are too costly. Many companies are crushed by the last straw of high interest rates. Finally, if the development is really unsustainable, it is also a way to stop the loss in time and find a reliable next buyer.

CRIC Chengdu Regional Research Manager Zeng Jinjin: Many projects in Chengdu have financial difficulties and developers should formulate development strategies based on their own circumstances

Construction has been suspended The main reason is still the financial problem.

Although the current real estate market is showing signs of recovery and is not as bleak as last year, it does not mean that developers can sit back and relax. Improper development will still cause financial constraints. The scene of small and medium-sized developers going bankrupt last year should not be forgotten. At present, there are still many projects in Chengdu that are more or less troubled by financial problems. It is not uncommon to start repairs after selling a house. In the current market, developers' development strategies should still be in line with their own actual conditions. Especially for some developers who are not strong, they should focus on stability.