Under the double attack of national regulation and bank money shortage and in the context of quite fierce regional industry competition, where do real estate enterprises go on earth? Scale, financialization, professionalization and club-style operation seem to be 4 current trends of transformation of real estate enterprises.

Scale: No transformation must result in a die-out.

   In the recent real estate market in China, different macro-control policies have been enacted one after another and the industry risk is bigger and bigger. Real estate enterprises present the “Matthew Effect” in which strong enterprises will become stronger and weak enterprises will become weaker. Large enterprises are crazy about enclosure and small and medium enterprises are faced with a compressed existence space. As said by a president of a small real estate company, “no transformation must result is a die-out”.

   Actually, under the continuous control of the State on real estate industry, developers focusing on the residential market become fewer and fewer. Three types of real estate, including tourism, senior care and industry are real estate enterprises’ favorite for their transformation. 

   Among top 100 enterprises in the real estate industry, including Vanke, China Resources, Wanda, Hengda, Longfor, etc., at least one third of them have stepped to the tourism real estate; Poly, Greentown and other leading real estate enterprises have begun exploring the senior-care real estate; Greenland which has been developing very rapidly has taken the lead in entering to the industry real estate.

   Financialization: Achieving the industry chain financing under the cooperation of real estate enterprises and banks

   Vanke became a shareholder of Huishang Bank by investing HKD 3 billion, Hengda became a shareholder of Hua Xia Bank by investing 4.2 billion and Yuexie Group purchased Chong Hing Bank by spending HKD 11.6 billion. Up to now, over 30 real estate enterprises including Greenland, China Resources, Xinhu Zhongbao, Macrolink, Hopson, etc. have established the cooperation with banks. 

   A financial senior pointed out that credit sale is the mainstream mode of transactions in the real estate industry, so it is hard for suppliers in the middle and upstream of supply chain to obtain the fund support from banks through the traditional credit; once operation is affected by the fund issue, the subsequent production of the whole china is out of the question. Therefore, developers, by buying bank shares, provide more financial channels for enterprises in the upstream of supply chain.

   On the other hand, cooperation of real estate enterprises and banks also greatly reduces the financing cost for real estate enterprises. “For real estate enterprises, such cooperation can reduce the cost of each step from the early-stage financing to the middle-stage mortgage to the subsequent community-financing experience”, as said by Xie Yifeng, Dean of Asia-Pacific Urban Real Estate Research Institute.  

   Professionalization: Mode replication, a key to success 
   Under the double influence of new market competition pattern and macro-control policies, the opportunism mode with the land acquisition as the orientation in the past fails to keep supporting the continuously rapid developer of real estate enterprises, so only if adjusting the direction in the right time and implementing the professional strategy with the building of competition advantages as the orientation, can they realize a quick growth in the next ten years.