Hangzhou May Have 40 Plus Housing Projects Underwater

A recent study by 浙报传媒地产研究院 estimated the cost for real estate developers in Hangzhou and due to paying high land prices, more than 40 projects could be headed for losses. More than half of those facing losses bought land in 2013.

The report is here: 42个项目面临亏损困境

This chart from the report breaks down the projects expected to lose money based on the year they bought their land:

The percentage of the total land sales (for residential construction) from 2013 that are expected to lose money (blue):

This is the proportion of Hangzhou developers (red) versus outside developers (blue) among the money losing projects:

This is the list of all the projects. There are three regions: Hangzhou city, the Yuhang district and the Xiaoshan district (marked by gray bars across the table). Left to right (ignoring first column) project name; purchase date of the land; location; the price of land per building sqm; affordable housing area in sqm (many firms must build affordable housing in order to get the land); estimated capital recovery sales price (¥10,000/sqm); cumulative sales average price (¥10,000/sqm); other land rights requirements; loss determination.

For loss determination, it is a little confusing. Where it says "亏损" in a dark red box, that means the project lost money. Note these projects all have sales data. Some others with sales data have "疑似亏损" in a dark pink box, this means a loss is suspected.

For firms without sales data, there is "预计亏损" forecast loss and "预计疑似亏损" forecast suspected loss. A couple boxes also have some other information specific to the individual project.

Here is an article discussing these results:
杭州40余项目疑似亏损 房企困境加剧
Developers in Hangzhou plight market is intensifying.

Recent report, entitled "Real Estate Project Cost Analysis of Hangzhou," the show that since 2010, after the project to take place in Hangzhou to sort out, Hangzhou is the current state of loss or suspected loss of real estate, as many as 42 .

"In the 42 projects face a loss of more than half of the project is to take the land premium of peak last year, the high cost of land." Zhejiang Daily Media [ -1.66% funding research report ] Ding Jiangang Estate Research Institute pointed out, Hangzhou Housing prices are now divided into two categories, one has begun to cut prices to help themselves; another category still waiting, waiting for the government bailout.

Housing prices in Zhejiang, general manager of a listed company told the "China Times" reporter, because Hangzhou property market stocks hit a new high in recent years, many real estate sales this year, the pressure is very large, some of the projects considered for return of funds, had to price change. But the project development is a long and dynamic process, to measure whether the static loss is not necessarily accurate. However, these reports do from one angle, reflecting the difficulties faced by Hangzhou housing prices.

"Conservative" data

According to Zhejiang newspaper media Estate Institute report, including the Pan Ding Yue House, Railway Plaza are, Paul one hundred million Regency Hill, Rhine confidant, Wharf Barony, including eight properties, are classified as loss items. Vientiane Amagi, Yuexiu Star Uptown real estate, such as 8, are listed as the expected loss program. The remaining 26 properties, is listed as a suspected loss.

"This report is compared with the actual situation is quite conservative." 丁建刚 in an interview with reporters, said, "According to our research, the possible loss of the estate should be more than 100, representing the sale of real estate market in Hangzhou now about three percent of our Finance costs are calculated by 8 percent, while nearly two-year bank loans as well as the development of the real estate trust financing costs are probably more than 8% this form our list, developers are still more recognized. "丁建刚 said.

"Some of the suspected loss of the reason for this project is divided, because some of the projects have not yet traded on the record, need to take place when the cost of land, and then cf land surrounding the current market conditions to measure." Ding Jiangang said.

Which is explicitly included in a loss of "Paul one hundred million Regency Hill" project, developers Paul Billion Properties Group in August 2010 to 5,705 yuan / square meter of floor price looks project site. The project's cumulative average turnover of about 9,000 yuan / square meter, according to Zhejiang newspaper media Estate Institute expects the project guaranteed price of about 13,000 yuan / square meter. This means that Paul million Regency Hill project to date may be a loss of about 4,000 yuan per square meter.

Guangyu Development [ -2.41% funding research report ] Ding Guangyu's Hyatt House also considered at a loss. By the end of 2010 to early 2011, to 8094 yuan respectively Guangyu Development / sq m and 9,413 yuan / square meter of floor price in Linping Nanyuan got two plots. According to these studies report estimates that the sale of guaranteed price shall be 17,000 yuan / square meter, while the actual total sales price of about 13,000 yuan / square meter.

For how to estimate the cost of real estate, Real Estate Institute of Zhejiang newspaper media gives a clearer algorithms: project sales cost price = (get to the financial costs + price + housing + social housing construction cost of sales taxes + cost + operating costs) / salable commodity area.

Among them, the real estate and housing construction cost at 3,500 yuan / square meter to calculate; finance costs in 2013 after the unification of the project to get to 8% of the total investment is calculated; sales tax is calculated at 10% of sales cost price; operating cost 5% of sales cost calculations.

China Index Research Institute, Hangzhou Branch High School students, research director pointed out that there is indeed a lot of real estate in Hangzhou now very difficult to survive. "For some small and medium developers, selling at a loss can return the funds, if no cash flow, will be faced with life and death issues. Some developers in order to survive, cut a little meat in exchange for living space is completely understandable." High School students say .

Get high swallow the bitter pill

"Hangzhou housing prices this year had a bad day indeed." Hangzhou, a real estate developer admits, these are listed suspected loss of real estate, in fact, is a common dilemma reflects the current housing prices in Hangzhou faced.

"The biggest problem is that the house sold. Goods store can not be realized in the hands of the most people in a hurry." Housing prices in a market of a department official said in Hangzhou.

Analysts pointed out that some of the main layout and Hangzhou in Zhejiang small and medium developers, there is no trading volume and capital returns very little, so that these developers have been pretty sad day. Some housing prices higher if it did last year, the cost of trust or private financing, debt service this year to further increase the pressure, have slashed prices of sales to return the funds.

"Watching the price further exacerbating the atmosphere of the market, buyers are expected to cut prices higher, the market also slowed down the pace." CRIC Hangzhou, chief analyst Liu Chenguang said.

It is noteworthy that the current real estate market in the sale of Hangzhou, loss items will be sold in 2013, to get to projects accounted for more than half.

According to Real Estate Institute of Zhejiang newspaper media statistics, facing losses in 42 projects, there are four projects in Canada this year, there are 24 projects in the land premium of the peak of 2013 to take the land, involving a total homestead 26. Last year a total turnover of Hangzhou Homestead 113 last year, high prices to get the project may face losses, accounting for the proportion of the year turnover homestead about 23%.

Ding Jiangang that last year, Hangzhou property market fully warmed up, volume hit a historic high of times, and the floor price of land has also hit a record high. However, from the fourth quarter of last year, Hangzhou property market has begun to cool. This makes a lot of competition for the last year has been faced with high land loss predicament.

"Land prices, the property market price because the cost of land is too high, it is easy to losses of some housing prices are expected on the market too high, resulting in its current predicament." 丁建刚 said, some developers respected high turnover because of take- rate of decline, inadvertently becomes a high inventory.

No comments:

Post a Comment