Small and medium-sized real estate companies that follow the traditional "high leverage" operating model are gradually entering the "cold winter period" and facing a life and death test.

According to incomplete statistics, from January to October 2018, 10 real estate companies declared bankruptcy due to broken capital chains. Among these 10, Chongqing accounts for 4, namely Chongqing Hongxing Kewang Real Estate Co., Ltd., Chongqing Dongke Industrial Co., Ltd., Chongqing Guowei Dingyi Investment Co., Ltd., and Chongqing Xidishan Group.

Image source: Blue Whale Real Estate

Case》》Chongqing’s top 50 real estate companies went bankrupt with a value of 7.5 billion yuan or were auctioned

Image source: Chongqing Runshan Real Estate Co., Ltd.'s official website

According to the official website of Chongqing Runshan Real Estate Co., Ltd., Chongqing Runshan Real Estate Co., Ltd. consists of Xidishan International Industrial Co., Ltd., Chongqing Yujiang Die Casting Co., Ltd., and Chongqing Yinxiang Industrial Group Co., Ltd.** *Established with capital injection. Information shows that the legal representatives of both Runshan Real Estate and Xidishan Group are Zhang Yuxi.

There is authoritative news that around April 25, a district-level court in Chongqing will seek opinions from creditors on whether Chongqing Runshan Real Estate Co., Ltd., an important enterprise of Zhang Yuxi of Xidishan Group, will enter bankruptcy proceedings. If Creditors were able to reach a consensus that Zhang Yuxi's company would enter bankruptcy proceedings.

Xidishan Group has been rated as the top 500 real estate companies in China and the top 50 in Chongqing. It is known as the "dark horse of real estate" in the Chongqing market. The Oriental International Plaza it mainly built was once positioned as the top urban complex in western China. , covering architectural forms such as super-A office buildings, six-star luxury hotels and luxury shopping malls. On September 22, 2013, Chongqing Runshan Real Estate Co., Ltd. officially signed a contract with Mandarin Oriental Hotel Company, the world's top luxury hotel. The project was assessed to have a market value of over 7.5 billion yuan in 2016.

Oriental International Plaza renderings

However, it was not easy to complete the development of this project. Soon the Xidishan Group felt that the capital chain was tight and the project operation was difficult.

Chongqing International Trust once publicly stated in court that as of August 16, 2017, Chongqing Runshan Real Estate Co., Ltd. owed a total amount of approximately 3.1796 billion yuan.

According to incomplete statistics, plus loans of approximately 3.25 billion yuan from 16 banks in Chongqing, the external debt of Xidishan Group and Oriental International Plaza may be as high as 6 billion yuan.

Oriental International Plaza, worth 7.5 billion yuan, may also face the fate of being auctioned. Oriental International Plaza may become the last "straw" to crush Xidishan Group.

Phenomenon》》Development strategies have been adjusted and many real estate companies have faded out

Picture source: Blue Whale Real Estate

According to incomplete statistics, from January to October 2018, Seven real estate companies have "disappeared" from the real estate industry rankings due to transformation or restructuring, including AVIC Sundar, Jiakai City, Yinyi Shares, Baoneng Real Estate, HNA Real Estate, and Zhejiang Guangsha. Six real estate companies have transformed into other fields and faded out of the real estate market.

According to media reports, Chongqing Yuneng Industry (Group) Co., Ltd. has gradually "disappeared" from the list of Chongqing real estate companies due to changes in equity.

It is reported that on April 26, 2018, Chongqing Yuneng Industry (Group) Co., Ltd. publicly listed and transferred 100% of the company's equity on the Beijing Equity Exchange, with a starting price of 2.152 billion yuan. During this period, Sunshine City, Jinke Co., Ltd., Country Garden, Chongqing Huayu, and Shenzhen Excellence Real Estate launched fierce competition. Until July 27, Chongqing Yuneng carried out industrial and commercial changes and transferred its sole shareholder to the central enterprise China Datang Group Co., Ltd. (Datang Group), changed to Shanghai Sangxiang Enterprise Management Co., Ltd. As of September 19, Sunshine City announced that it had acquired Shanghai Sangxiang for 4.97 billion, and Chongqing Yuneng officially became the target asset acquired by Sunshine City.

Extension》》Shoucheng Real Estate has had its development qualification revoked

Some real estate companies "disappeared", some real estate companies "faded out", and some real estate companies had their development qualifications revoked.

According to the official website of Liangjiang New District, Chongqing Shoucheng Real Estate Development Co., Ltd. was revoked from the temporary real estate development license because it did not meet the relevant requirements of the "Qualification Management Regulations for Real Estate Development Enterprises" and the "Chongqing Urban Real Estate Development and Operation Management Regulations" Qualifications determined.

Image source: Liangjiang New District official website

According to relevant information, Chongqing Shoucheng Real Estate Development Co., Ltd. has developed the Shoucheng Dingshang Mingdu project, located on Konggang Avenue, Yubei District. Currently, The property is sold out.

Observation》》Industry concentration has increased, and the market for small and medium-sized real estate companies has been squeezed

Ouyang Jie, senior vice president of Xincheng Holdings Group Co., Ltd., once said, “90% of small and medium-sized real estate companies will Exit real estate projects. By 2020, the top 20 real estate companies may account for more than 60% of the market share. ”

Image source: Yihan Think Tank

This argument is based on data. It has also been gradually confirmed. According to data from Yihan Think Tank, as of November 2018, the number of real estate companies with sales exceeding 100 billion has reached 26, and the threshold value of the TOP10 has reached 182.1 billion, a record high.

As the base of real estate companies with RMB 100 billion in the future continues to increase, RMB 100 billion is no longer the goal but just the starting point. As the real estate industry begins to transform from high-speed growth to high-quality growth, the scale of the impact of real estate companies The determination remains undiminished and competition in the industry is fierce. This phenomenon also proves from the side that industry concentration and thresholds are still increasing.

According to the forecast of Yihan Think Tank, from the perspective of corporate sales targets, it is expected that in the next two to three years, 30% of real estate companies will occupy 70% of the market share, while the remaining 70% of real estate companies will compete for the remaining With a market share of 30%, the market share has further narrowed.

As the scale of the industry reaches its peak and funding continues to tighten, a new round of reshuffle is coming.

Analysis》》Multiple market tests may intensify the survival of the fittest

From the second half of 2016 to October 2018, China’s real estate market has gone from the industry’s center of attention to the industry trend in just about 2 years. It's so hot that it slowly "cools". Almost all companies and investors that entered the real estate industry during the boom period received good feedback from the market, causing more and more companies to start getting involved in the real estate industry.

However, as the market environment changes and regulatory policies continue to deepen, the market’s test for developers has become increasingly obvious. Affected by the comprehensive impact of market downturn, financial environment, policy environment and other aspects, some developers have even left the real estate industry due to broken capital chains and other reasons.

With the changes in the real estate market structure, the "high debt" and "fast turnover" model of some real estate companies has become unsustainable.

The days when the real estate industry is developing rapidly and housing prices remain high may be gone forever. Major real estate companies have followed the trend and launched transformation plans one after another. In fact, "de-real estate", pursuing diversified development strategies, and expanding business scope have been the development directions of major real estate companies in recent years.

In this regard, Xu Bo, a senior real estate expert, said that large developers are more recognized by home buyers in terms of scale, brand, service, guarantee and other aspects; small developers are not strong enough and have limited scale. Even if the performance in one aspect is outstanding, the overall strength is still relatively weak. Some real estate companies have accelerated the process of bankruptcy due to the intervention of capital. Many small developers fail, firstly because of strategic decisions, secondly because of self-management, and thirdly because of capital debt.

Taken together, it is unlikely that small and medium-sized real estate companies will go bankrupt in large numbers in the short term. However, as the scale and concentration of the real estate market intensifies, they will face high debt ratios, financing difficulties, concentrated debt maturities, Problems such as poor sales leading to slow return of funds are emerging one after another, and some small and medium-sized real estate companies may accelerate their exit from the market.