The Industry’s Prospect in 2023 : The Chinese Real Estate Industry Can Find a Way Out

The Industry’s Prospect in 2023 : The Chinese Real Estate Industry Can Find a Way Out

2023年中国房地产行业回顾与展望: 山重水复疑无路，柳暗花明又一村  

Endeavours to survive in 2022 

2022年房地产业面临的困境与解困努力 

The Chinese real estate industry fell in 2022, as more and more real estate enterprises faced a debt crisis. As a result, development projects were halted, home deliveries were delayed, and housing sales plummeted. In order to "ensure timely deliveries of pre-sold homes and maintain people's well-being," the central government introduced a number of financial support policies in July 2022. In addition, it ordered the local governments to implement their own policies in accordance with local circumstances in order to stabilise market expectations. According to pertinent media data, a record amount of over a thousand policies has been implemented by over 300 local governments in 2022, whether at the provincial, municipal, or county levels. These policies primarily focus on reducing the restrictions on property purchases, lowering down payments and mortgage interest rates, raising the credit limit for provident fund loans, distributing housing subsidies, shortening the period of restricted sales, and lowering transaction taxes and fees.

2022年中国多家房企陷入债务违约及项目停工、延期交楼等困境，房屋销售增速下滑，房地产市场面临严重危机。2022年7月，中央政府提出“保交楼、稳民生”的工作目标，配套出台多项金融支持政策，并要求地方政府因城施策，稳定市场预期等。根据相关媒体数据监测，2022年全国已有超300省市（县）出台政策超千条，达到近年峰值。各地政策主要涉及优化限购政策、降低首付比例和房贷利率、提高公积金贷款额度、发放购房补贴、降低限售年限、降低交易税费等多方面。

How effective were the measures? According to the statistics published by the National Bureau of Statistics in December 2022, from January to November 2022 real estate development investment decreased by 9.8% year after year; funds available to development businesses decreased by 25.7% year after year; at the end of November, the area of commercial housing available for sale increased by 10% year after year; and the real estate development climate index remained low in November. The market depression appears to be continuing, and stranded real estate corporations seem still in trouble.

即便如此，从实际效果来说，根据国家统计局2022年12月发布数据：2022年1-11月份，房地产开发投资同比下降9.8%，开发企业到位资金同比下降25.7%；而在11月末，商品房待售面积同比增长10%；11月份房地产开发景气指数仍处于较低水平。可见真正走出困境的房企仍是少数。

Additional relief measures to be implemented  in 2023 to rebuild industry confidence

2023年解困政策持续和信心重塑 

Vice Premier of the State Council He Liu stated in a speech at the end of 2022 that "real estate is a backbone of the national economy" and made it clear that additional steps would be taken to lower the debt-to-assets ratio, stabilise market expectations, and restore the industry's confidence. Massive real estate support measures are anticipated to be announced in the first half of 2023, and it is expected that the whole industry will gradually recover from the turmoil in the second half of the year. However, over-optimism is not advisable since the results remain to be seen. Key rescue measures include:

2022年底，国务院副总理刘鹤指出“房地产是国民经济的支柱产业”，强调房地产市场的重要性，并明确正考虑新的举措，改善资产负债状况，引导市场预期和信心回暖。预计在2023年的上半年，房地产解困扶持政策将持续并加大力度，到了下半年，行业整体将逐渐脱离困境，但具体复苏程度尚待观察，且不宜过度乐观。具体的解困路径包括：

1. Mergers and acquisitions. The Notice on Doing a Good Job in Providing Financial Support to Promote the Stable and Healthy Development of the Real Estate Market was published by the People’s Bank of China and China Banking and Insurance Regulatory Commission, which contains 16 financial policies to facilitate financing for real estate companies. Following that, massive policies have been implemented to increase financial support to real estate, and real estate enterprises are now permitted to raise funds through credit loans, issuance of bonds, and equity acquisition. In order to better achieve the objective of "ensuring timely deliveries of pre-sold homes and maintaining people's well-being," it may form a government-led case of mergers and acquisitions to rescue major endangered projects or real estate enterprises. Furthermore, as regulatory authorities have published documents encouraging financial institutions to grant M&A loans, large financial institutions, asset management companies, funds investment institutions and real estate companies with a healthy cash flow will become more financially stable to enter the M&A market for acquisition of the assets or equities of the troubled real estate companies. Due to their substantial human resources and strong financial position with the policy support, we therefore predict that the asset management companies, funds investment institutions, central enterprises, and major real estate businesses of mixed ownership would be the leading players in the real estate mergers and acquisitions market in 2023.

一、来自外部的救援式融资并购。自央行、银保监会发布《关于做好当前金融支持房地产市场平稳健康发展工作的通知》，出台十六条金融措施，房企融资政策支持进展加快，形成支持房地产企业信贷、债券、股权融资政策并存的格局。因此，在“保交楼”“稳民生”目标下，或将形成政府主导拯救重大濒危项目或房企的收并购案例。与此同时，监管部门已出台文件鼓励金融机构提供并购贷款，大型金融机构、AMC资产管理公司、专业基金和目前现金流良好的房企也将稳步进入并购市场，对涉困房企进行资产或股权收购。在政策支持的背景下，具备人力、资金优势的AMC机构、专业基金、央企和混合所有制大型房企，将成为2023年地产并购市场的主力。

2. Restructuring. Small and medium-sized real estate businesses that are unable to get outside help must rely on themselves to find a solution, or they can support one another by working together on projects or finding new investors. Out-of-court reorganising, pre-reorganising, or applying to a court to begin the bankruptcy reorganisation are a few options. Reorganisation may boost asset values for businesses and give unfinished projects new life.

二、抱团自救式的合并重整。外部救援的资源毕竟相对有限，对于无法获取外部救援的中小型房企而言，或将采取抱团取暖的方式进行自救，引入合作开发方或新投资方。重整的方式，则既可能直接进入法院的破产重整程序，也可能在法庭外重组或预重整，进行资产债务重组，增加资产价值，盘活烂尾项目。

3. Innovation and quality enhancement. The Chinese real estate market has reached saturation point and hit a bottleneck for product homogeneity after years of strong growth. To win over customers, real estate companies should be more than just construction contractors; they need also be community builders. They should make an effort to offer customers a high-end community that is harmonious and can offer people all the resources they require for daily living, including schools, hospitals, transit, low-carbon, shopping centres, and so on.

三、市场期待品质提升与创新。中国房地产行业经多年高速发展，产品同质化严重，市场需求已近饱和。房企要赢取消费者信心，应转向市场提供高品质房屋和社区环境，更加注重教育、健康、交通、低碳、商业服务、邻里关系等配套资源的一体化提供，建设面向未来的美好社区。

Suggestions for the real estate enterprises – seize the opportunity brought by the change

对于行业的建议——挑战之后或迎来新的机遇期 

The year 2023 will be a period of opportunity for the real estate sector as favourable policies are set to be published to ease financing and increase market demand. However, it is unclear whether these policies will be able to fulfil their intended purposes. The industry shake-up will also eliminate the weak, and those who survive will find it simpler to acquire land, increase sales, arrange finance, and raise consumer awareness.

2023年房地产行业融资端和需求端将呈现政策利好的局面，但实际政策效果尚待实践检验。同时，行业充分洗牌后，生存下来的企业在拿地、销售、融资、市场口碑等方面都将获得新的发展机遇。

However, this does not mean that the industry's regulation will be in any way relaxed. Instead, the government will step up its efforts to stop illicit business practices, particularly excessive financing and non-compliance with development regulations, as well as to defend the rights and interests of buyers. Real estate companies should focus more on compliance in order to take advantage of favourable policies and achieve rapid growth.

但这并不意味着政府对房企的行政监管将弱化，相反政府监管预计将进一步增强，尤其在针对房企的过度融资、开发不合规、买受人权益保护等方面。这也意味着，欲借势政策利好的东风，各家房企还需大幅提高自身的经营合规能力。

In such a situation, real estate enterprises are also faced with the burden of managing lawsuits that arise one after another. For failing to fulfil their financial obligations, many real estate enterprises were sued by project suppliers, general contractors, buyers, investors, or cooperative developers in the second half of 2022. Their sufferings were compounded by the fact that they had to struggle to treat the surge of disputes. How to properly deal with those lawsuits will still pose challenges for real estate enterprises in 2023. If necessary, they may consider seeking help from lawyers to win a favourable result.

在此形势之下，另一个不得不应对的挑战，即是数量持续增长的诉讼争议案件。自2022年下半年开始，部分房企已出现因资金链断裂引发系列诉讼的情况，项目供应商、总包施工方、买受人、投资方、合作开发方等将房企告上法庭，大量诉讼案件令这些房企雪上加霜，疲于应付。2023年，妥善处理这些诉讼案件仍将是房企的艰难任务，必要时应求助于外部专业法律团队的支持。