The news that mainland real estate companies are in financial difficulties has continued to emerge recently, and the property market policies in various regions have changed from lowering prices to preventing falling. The golden age of domestic real estate seems to be over. The “2021 Hurun Report” was released a few days ago. For the first time in the top ten list, no real estate business has been seen. It remains to be seen whether it means that the mainland residences will enter the era of “cabbage prices”.
The Hurun China 100 Rich List announced that Nongfu Spring (09633) Zhong Sui Sui became China’s new richest man with a net worth of 390 billion yuan (RMB. The same below). His wealth increased by 7% over last year; the second was the founder of Bytedance. Zhang Yiming, who is only 38 years old, has three times more wealth than last year, surpassing Ma Huateng and Ma Yun.
Since last year, the concept of new energy vehicles has been very popular, driving the battery leader Ningde Times (300750.SZ) Zeng Yuqun’s net worth soared nearly three times, and ranked third on the 100 rich list. As for the previous regulars on the rich list, all real estate developers have disappeared. The top real estate developer is Country Garden (02007) Yang Huiyan, ranking 11th with 185 billion yuan.
After more than two decades of rapid development, the golden years of the mainland real estate industry seem to have passed. The suppression of policies may be one of the factors. In addition, the excessive overdraft of market demand in the past 20 years has also caused the industry to lose its growth momentum.
In fact, since 2008, the United States has continued to introduce quantitative easing policies, which has devalued silver and paper; coupled with the rapid growth of China’s economy, people’s demand for improved living conditions has greatly increased. Preserving value, driving property prices soaring. Businessmen engaged in the real estate industry naturally make a lot of money, and have occupied the forefront of the rich list for many years.
Three red lines hit the key
Although the US “release of water” has not stopped, China has adopted targeted “release of water” last year. On the one hand, it relaxes lending to small and medium-sized enterprises, and on the other hand, it restricts the lending of real estate enterprises through the “three red lines”. Real estate companies are “received” in disguise, and companies are falling into financial difficulties one after another.
Among them, the more interesting ones include China Fortune Land Development (600340.SH), which is listed on the A-share market, and China Evergrande (03333), which is listed on the Hong Kong Stock Exchange. Financially-stricken companies have successively reduced prices and sold properties, causing the mainland property market to turn cold. The stock prices of listed real estate companies have fallen, and real estate developers will inevitably shrink. In addition to real estate companies, Ping An of China (601318.SH) (02318), which has also invested in China Fortune Land Development, has also fallen more than 40% this year.
As early as 2016, President Xi Jinping proposed to insist on the positioning of “a house is for living, not for speculation” and demanded to return to the residential property of housing. However, in recent years, the property market control measures have mainly focused on purchase restrictions, with little effect. It was only after the “three red lines” requirement was introduced last year that it hit the real estate company’s key players, and the company’s properties had to cut prices for sale.
In fact, apart from financial policies, population development also has a long-term impact on the real estate industry. At present, the population in the Mainland continues to be aging, coupled with problems such as population migration, some cities in the Northeast region have experienced negative population growth early. The soaring property prices in the past two decades have also caused many wealthy people to buy real estate for their children early.
Ma Yun’s “cabbage price” prediction comes true
It can be expected that the demand for the real estate industry in the Mainland will continue to shrink in the next few decades, and the industry’s golden development period has passed. The densely populated first- and second-tier cities may still maintain a relatively stable upward trend, and the property market in third- and fourth-tier cities is believed to be difficult to reproduce high-speed growth.
Jack Ma, the founder of Alibaba (09988), once predicted that the house will become “cabbage price” in the future, which has attracted a lot of discussion. Recently, in Hegang, Heilongjiang, the price of some houses has dropped to 50,000 yuan, which amazes the market whether the era of “cabbage prices” has come early.
The mainland real estate market is constantly changing. Whether it will have an impact on the Hong Kong property market is worthy of attention. Hong Kong’s property market has always been so prosperous in recent years, and mainland funds have been one of the main driving forces. However, when the real estate era is over, the era of technology and new energy has begun, and investment opportunities are still abound.