Commercial real estate (special reading) is new in that it can bring huge benefits, but it also brings huge social risks, and it will also bring about the redistribution of social benefits and wealth.
PART 1
Background on the development of commercial real estate in China
1. Policy background
Real estate market control policies have been launched frequently, targeting residential real estate with "rapid price increases". People have noticed that purchase restrictions restrict the purchase of residential, non-residential commercial real estate, etc. Not within the purchase limit.
2. Industry background
Compared with residential properties, commercial properties have two important characteristics: 1. The income is relatively stable and long-term; 2. It can resist and resolve the financial risks caused by economic fluctuations to a certain extent.
After the regulation of the residential market, commercial real estate, which is in a subordinate position and relatively unnoticed, has ushered in unprecedented development opportunities.
Current status of China’s commercial real estate development
1. Continued rapid growth, increasing risk of regional bubble
In 2013, China’s investment in the development of commercial business buildings was 1.1945 billion yuan, an increase of 28.28%; shopping malls in several cities such as Chongqing, Shenyang, Qingdao and Xiamen The vacancy rate is as high as 15% to 20%. And 10% is the generally acceptable warning line for shopping malls.
2. Retail growth is slowing down, and commercial project mergers and acquisitions are frequent.
3. Physical stores are large, e-commerce growth is gaining momentum, and integration models are diversified.
In 2013, the transaction size of the online retail market was nearly 1.9 trillion yuan, an increase from the previous year. reached 42.8%, but only accounted for 8.04% of total retail sales. E-commerce and traditional retailers are interpenetrating each other, new models are emerging one after another, and e-commerce is entering physical stores.
Characteristics of the development of commercial real estate in China
Insufficient total amount: With the continuous improvement of urbanization level, the demand for commercial real estate continues to rise. Nowadays, 20 million people in China move from rural to urban areas every year. If calculated based on the per capita commercial area of 1.2 square meters, in the future There will be an additional 24 million square meters of commercial demand every year.
2. Structural imbalance: manifested as regional imbalance, location imbalance and industry imbalance. Many commercial complexes do not develop in accordance with economic laws and population layout. The model lacks characteristics and lacks mutual cooperation among industries.
Three parties intervened: A large number of developers poured into the commercial real estate field, resulting in vicious competition and reduced efficiency.
China's commercial real estate faces major problems
Problem 1: Insufficient developer experience and light weight
Quantity: The commercial volume of my country's first- and second-tier cities increased from 70,000 square meters in 2012 to 80,000 square meters in 2013, with about 300 shopping malls per year. Momentum is growing.
Quality: Rent and vacancy rate are the two indicators that best reflect the value of shopping malls. Currently, rents are falling and vacancy rates are rising. For example, Shenyang ranks first in the country with a vacancy rate of 24.3%.
Problem 2: Real estate developers ignore the importance of the early planning stage
After acquiring land, some developers choose to form their own teams to conduct brief research and demonstrations, but their purpose, professionalism, operability, depth, and reliability The degree of integration with the market cannot be compared with the work of professional commercial real estate planning companies. As a result, in most cases, developers’ positioning of projects is vague and has a certain degree of randomness, which inevitably leads to insufficient guidance for planning and design. It is obvious and not very guiding, which leads to various hidden dangers.
Problem 3: There is a disconnect between early planning and design and later operation
Problem 4: Lack of local overall planning and unbalanced commercial layout
Many local governments have not coordinated urban planning and commercial network planning, and rigidly matched the proportion of commercial land and residential land. Insufficient consideration is given to the economic development laws and population layout of the entire city. In order to pursue short-term capital recovery, many urban commercial projects have been clustered in hot spots, while other areas lack commercial supporting facilities, resulting in an imbalance in the commercial layout of the entire city.
Problem 5: Financing bottlenecks restrict the transformation of enterprise development and operation models
Different from residential development, commercial real estate investment is large, the cycle is long, and returns are slow, but successful projects have high returns and long-term benefits.At present, in addition to traditional bank loans, there are a wide range of financial products to choose from, such as externally issued notes, trusts, private placements, etc. However, the cost of funds is very high and does not match the demand for commercial real estate. Therefore, we must continue to innovate in the field of real estate finance.
PART 2
The difference between commercial real estate development and residential development
1. Different theoretical foundations
The theoretical basis of residential development is the product supply and demand theory, while commercial development follows the investment theory. Commercial pricing is directly based on rents and their expected upside.
2. Different customers
The customer base of commercial services is much larger than that of residential owners. The radiation range of a 30,000-40,000 square meter shopping mall is 2-3 kilometers, and the radiation range along the main traffic roads will be extended. In addition to individual investors, it is also necessary to study institutional investors; the end user of business is merchants, and merchants in various formats also need to be studied.
3. Different levels of planning
Planning and design determine the survival of commercial real estate (special reading) projects. The business combinations are complex. How planning and design can meet the requirements of merchants, ensure the maximum interests of merchants, and then ensure the development of projects is crucial. problem. Investment promotion must be done in advance.
4. Different development processes
The site selection process is more rigorous; research is more complicated than residential development;
development positioning is more systematic than residential development positioning;
promotion is more targeted than residential promotion;
development has more opening, operation, and Management of three links.
Commercial positioning: First of all, the end use must be defined; the business combination that maximizes benefits must be defined; sustainable management is crucial and is the basis for positioning; compared with residential, commercial positioning is closer to customized production; commercial positioning is not a one-time use Work, no matter how good the business positioning is, must be adjusted in 2-3 years, or up to 5 years.
5. Different interest relationships
Economic benefit generation model of residential development:
Total sales - total cost = profit
Basic model of economic benefit of commercial real estate development:
Total income - Total cost = profit, total income includes rental income and self-employment income , sales revenue and other income, etc.
Commercial real estate development must balance multiple rights and interests:
PART 3
Three profit models and five major profit points of commercial real estate
Three profit models: Choose between "renting" and "selling"
only rents but does not sell (fish-raising faction): such as Vientiane City and COFCO Joy City
only sells but not rents (pig-killing faction): such as SOHO Real Estate and Vanke before 2009
rents and sells, rents and sells ( Fence-riding faction): Comparison of three profit models such as Wangjing International Business Center and Dacheng International Shopping Center:
Commercial real estate profit points
① Correct mentality: long-term profits, face risks
② Prosperity in one go:
③ Pre-investment
A. Product design should be based on the requirements of end users.
B. It is necessary to conduct research and solicit opinions from merchants in advance, and businesses with special requirements for products should be as early as possible Sign the letter of intent
C. The development cycle of commercial buildings is long, and there is competition in investment promotion, so we must strike first to gain the upper hand. Merchants have a deeper understanding of consumers than we do, and the confidence of developers is based on the confidence of merchants. You don’t know how expensive firewood, rice, oil and salt are. The success of merchants is the basis for the success of the entire commercial property.
④ Theme positioning
⑤ Exit mechanism
Choosing the right time to exit is the last problem that China's commercial real estate (special reading) operation chain must solve. Optional exit mechanisms include: issuance of REITs, acquisitions by investment banks or funds, IPO after spin-off, equity transactions, asset swaps, en bloc sales, retail sales, etc.
PART 4
How to sell commercial real estate well?
1. Development process
2. Profit model (the profit model of a sales-based business is the sales model):
Pure sales
Sales with lease
Short-term Leaseback sales (generally three years of leaseback)
Long-term leaseback sales (generally ten years of leaseback)
3. Capital chain relationship
Taking Wanda as an example, from pure sales to achieving capital balance through sales and holdings Get greater benefits.
4. Product features
Property rights are dispersed: Sales-type businesses divide the property rights according to commercial use conditions. The entire commercial property will have multiple owners, and the property rights are relatively dispersed.
The main area range is relatively small: Since the properties are divided and sold, the relative space of each independent shop is relatively small; at the same time, according to the current market demand, the main area range of most sales shops is relatively small.
is mainly based on commercial streets and floor shops: sales-type shops have relatively dispersed property rights, making it difficult to conduct centralized and unified operations. However, the commercial atmosphere of product forms such as commercial streets and floor shops is mainly cultivated by market forces, and they have naturally become the main source of sales-oriented products. form.
meets diverse needs: the functional configuration must meet the requirements of merchants’ daily business operations, as well as consumer convenience and other needs.
5. Marketing methods
Drive marketing through investment promotion
Carry out event marketing with the help of government policies
Alliance of business giants for brand marketing
Customer-oriented customized marketing
Service marketing
Internet marketing
6. The difference between sales type and self-sustaining type
PART 5
Comparison of market characteristics between first-tier and second-tier and third-tier cities
1. Definition
Based on the economic aggregate level of my country's major cities,
Beijing, Shanghai, Guangzhou and Shenzhen are defined as first-tier cities;
defines cities with GDP greater than 500 billion yuan as second-tier cities;
defines cities with GDP between 200-500 billion yuan as third-tier cities,
defines other provincial capital cities with GDP below 200 billion yuan and cities with GDP between 100-200 billion yuan. Yuan's non-provincial capital cities are defined as third-tier weak cities.
Second- and third-tier cities mainly refer to second-tier cities and third-tier strong cities.
2. Comparison of market characteristics
PART 6
Sales-type commercial property market status and development trends sales
1. Market status
Sales-type commercial real estate (special reading) "Great Leap Forward", the market size expanded rapidly.
2. Policy background
First-tier cities have already banned the operation mode of property-right shops and leaseback sales, and such sales methods still exist in second- and third-tier cities.
Relatively speaking, second- and third-tier cities have more bubbles in the sales shop market, and some cities have taken restrictive measures. For example, Suzhou has set aside a portion of the property as a risk prevention asset for divisible-sale commercial real estate projects before pre-sale. freeze.
3. Market characteristics
Price characteristics: The relative price of commercial properties in second- and third-tier cities is relatively high. Generally, the price of single-story commercial properties is about twice that of residential properties. The price of commercial properties in first-tier cities is similar to that of residential properties, even in some high-end cities. In residential projects, commercial prices are lower than residential properties.
Product Features: There are still property-right shops in the market of second- and third-tier cities. First-tier cities have explicitly banned centralized commercial division of small property rights, and property-right shops have disappeared; second- and third-tier cities have a higher acceptance of high-floor commercial products, and three-story bottom shops have become extinct. Shopping malls and commercial streets are common, and in first-tier cities they are almost all one- or two-story products.
Status attribute: Sales-type businesses in second- and third-tier cities are the profit support point that supports the entire project. Some developers even pin their overall profit indicators on the commercial premium after acquiring land at a high price; first-tier cities are more On the basis of achieving normal sales, commercial supporting functions can be realized to enhance the overall value of the project.
4. The main problems faced
Due to the dispersed property rights of sales-oriented businesses, it is impossible to effectively control the business format.
Shop rents are out of touch with sales prices, and the return on investment is too low. The return on investment years of some shops in third-tier cities even exceed the property rights of the shops.
5. How to balance sales and operations
Commercial pricing is reasonable. If the project wants to continue to operate, the price is not as high as the higher. The high selling price separated from the rental basis, the owner has higher expectations for rent, and will have higher expectations for future investment and investment. Operation creates huge pressure.
provides commercial after-sales services, realizes investment entrustment, and anchors commercial formats through investment entrustment. For example, the "Golden Apple" plan recently launched by Longhu provides services such as positioning coaching and investment entrustment, forming a certain degree of control over the sales business.
