Real estate agency giant also joins the land grab

Author | Cao Anxun

Editor | Zhou Zhiyu

Following the strong support from Shenzhen state-owned shareholders and financial institutions for Vanke and Jinke, the real estate industry has once again received an encouraging signal.

Recently, there was a frenzy in land auctions in Beijing, with 37 real estate companies including China Railway Property, China State Construction, Poly, Greenland, SOHO China, and Jinfeng competing for a land parcel in the sixth phase of Konggang, Shunyi District. The auction went straight into the lottery phase.

Surprisingly, among the various central SOEs, high-quality private enterprises, and real estate companies, a new player emerged - Beihaojia Real Estate, a real estate development company established by Beike just last September.

Being at the forefront of the real estate market and keenly aware of market trends, Beike's move to acquire land at this time indicates its optimism about the current real estate market, hence the bottom fishing strategy.

Although Beihaojia did not win the Shunyi land parcel in the end, as China's largest real estate intermediary platform, Beike's participation in land acquisition has sparked discussions in the market. Does this mean that Beike is venturing directly into residential development and becoming a developer?

Sources close to Beike told Wall Street News that Beike is not aiming to become a traditional developer, but rather, in the new stage of the industry, it wants to leverage its advantages in industrial internet, with the core concept of C2M (Customer to Manufacturer), to collaborate with partners in creating good products and services, and to explore the direction of the industry's next development.

This could potentially accelerate inventory turnover, reduce customer acquisition costs, and create a new type of real estate development model that generates "hot-selling" products, which may help Beike explore a new growth trajectory in performance.

Huang Tao, General Manager of the Guangzhou Zhongyuan Real Estate Project Department, said that this is like helping Party A take a look, using the intermediary's experience in sales to assist Party A. If this works out, it will be a win-win cooperation.

"Currently, Beihaojia is in the early exploration stage, hoping to refine and verify the positioning and capabilities of new housing products under the C2M model through the exploration of small-scale projects in the early stage," the source said.

The Beijing Shunyi land parcel that Beike is eyeing this time has a planned construction area of about 33,800 square meters, with a total land price of less than 1.2 billion yuan, and no construction requirements, making it suitable for Beike to practice on. If Beike's presence appears again in land auctions across the country, it should not come as a surprise.

Including Beike's bottom-fishing move, positive signals in the current real estate market continue to accumulate.

On one hand, the State Council, Ministry of Housing and Urban-Rural Development, China Securities Regulatory Commission, major banks, and SOEs have recently shown frequent support for real estate companies, supporting them in stable development from a strategic and financing perspective.

Not only did the State Council propose further optimization of real estate policies, triggering a collective rise in real estate stocks on March 25, but the CSRC and banks have also recently opened up more financing and debt repayment channels for high-quality real estate companies such as Vanke, Jinke, and Longfor, expanding the "white list" of real estate companies and increasing loans.

At the same time, trillion-dollar asset management giant New China Asset, Shenzhen Metro, Futian Holdings, and other state-owned enterprises have come forward to support real estate companies, either by voicing support, subscribing to REITs with real money, increasing board seats, or taking multiple measures to stabilize the stock and debt and operational aspects of real estate companies On the other hand, since March, the transaction volume and viewing volume of new and second-hand houses in Beijing, Shanghai, Guangzhou, Shenzhen, and even strong second-tier cities have all shown a significant increase compared to the previous month.

According to statistics from Zhongyuan Real Estate, on March 10th, nearly 1200 second-hand houses were sold in Beijing. In Shanghai, the average daily transaction volume of second-hand houses from March 1st to March 8th was 571.5 units, which is twice that of February.

Zhang Dawei, Chief Analyst of Zhongyuan Real Estate, analyzed that the effect of loosening purchase restrictions in first-tier cities continues to be released, and the real estate market is really picking up in 2024. "Although it's a bit later and less intense than in previous years, as long as there are policies, the market will have a wave of trends recently."

Various signals indicate that with the continuous efforts of policies, the real estate market is about to bottom out, and the warm spring for real estate developers is not far away.

Citibank also released a report on March 12th, pointing out that after three years of deleveraging, the Chinese real estate industry is showing signs of improvement, and industry credit risks are expected to further decrease to a manageable level.

Industry capital represented by Beike has been keenly entering the market to bottom fish since last year.

Tencent and JD.com respectively spent 6.4 billion yuan and 3.1 billion yuan to acquire land in Beijing. Former "coal bosses" Liu Manshi, Zhang Yaping, and Wen Qiugui, who used to buy buildings in bulk, have also returned to the market, investing nearly 20 billion yuan in real estate since last year. Jinfeng Cement Group took over the Shanghai Bulgari Hotel for 2.4 billion yuan, becoming the major shareholder of the state-owned enterprise China Overseas Land & Investment Ltd.

Some industry capital is not satisfied with simply buying properties but is directly involved in development. Weixing Real Estate under the "Button King," Oriental Yuhong under the "Waterproof Giant," and Aaron Real Estate under the "Textile Tycoon" are all dark horse players in recent years who have gone against the market trend in terms of sales and land acquisition.

The intensive bottom fishing by these industry capitals powerfully demonstrates that there is still a lot of business to be done in the real estate industry. The trillion-dollar market not only accommodates veteran developers but also these "newcomers." The only difference is that the gameplay needs to change to meet the needs of users.

In the new development model of the industry, players in the field are undergoing a major reshuffle. The previous scale-based and assembly line development logic needs to adapt to the demands of the new era, addressing the pain points of homebuyers; developers are no longer just traditional spatial developers but are becoming spatial operators.

In the collision and competition between new and old players, industry capital and their Internet thinking, as well as the "play" of manufacturing industry upgrades, will drive the real estate industry to accelerate transformation, improve quality and efficiency, and new development models will emerge from this transformation