On November 28, the China Securities Regulatory Commission announced that it had decided to adjust and optimize five measures in terms of equity financing, marking that the “third arrow” to support financing in the real estate market had been shot. So far, stable real estate financing has formed a “three arrows” situation of credit, bonds, and equity financing. In the context of the overall downturn in the real estate market and the obstruction of the source of funds for real estate companies, in the past month, policies to support the real estate market have been intensively introduced. It is expected that this will help to revitalize the real estate market, prevent risks, transform and develop, and better serve and stabilize the macroeconomic market.
The real estate industry is associated with many upstream and downstream industries, and its virtuous circle is of great significance to the healthy development of the economy. The stable and healthy development of the real estate market is also related to the stability of the financial market and the overall economic and social development. Promoting the stable and healthy development of the real estate market is an important part of stabilizing the macroeconomic market. The real estate market needs to stabilize and recover, and there is also a basis for further realizing stable and healthy development. China’s “real estate crisis” and “decline of the construction industry” hyped by overseas media are one-sided. my country is still in the peak period of urbanization and the initial stage of rural revitalization, and the investment in fixed assets of the whole society has great growth potential. Therefore, it is very timely to “fire three arrows together” to stabilize real estate financing and effectively solve the reasonable financing needs of the real estate industry.
As the “first arrow”, the recent strength of “credit” is not insignificant. On November 23, the People’s Bank of China and the China Banking and Insurance Regulatory Commission issued the “Notice on Doing a Good Job of Financial Support for the Steady and Healthy Development of the Real Estate Market”, known as the “Financial 16 Articles”. Among them, it is clear that real estate development loans will be stabilized.
In response to the overdue delivery of houses caused by the risk exposure of some real estate companies in the early stage, relevant departments have issued a special loan of 200 billion yuan for “guaranteed delivery of buildings” to support the construction and delivery of sold overdue and difficult-to-deliver houses. On the basis of special loans, the People’s Bank of China will launch a 200 billion yuan “guarantee building” loan support plan for 6 commercial banks to provide zero-cost funds for commercial banks to encourage them to support the “guaranteed building” work. A number of banks quickly implemented the relevant requirements of the “Financial 16 Articles”. Recently, some banks have signed strategic cooperation agreements with real estate companies. Statistics show that more than a dozen real estate companies have obtained banks’ intentional credit lines of over 1 trillion yuan.
As the “second arrow”, the “private enterprise bond financing support tool” has recently continued to advance and expanded. Under the framework of this policy, China Bond Improvement Co., Ltd. issued a bond credit enhancement letter to three private real estate companies, Longfor Group, Midea Real Estate, and Jinhui Group. Yuan medium-term notes. In fact, China Bond Improvement Co., Ltd. has received credit enhancement business intentions from nearly a hundred private real estate companies through the public business mailbox. In addition, the China Interbank Market Dealers Association has successively accepted Longfor, Midea Real Estate, and Seazen Holdings’ 20 billion yuan, 15 billion yuan, and 15 billion yuan shelf registration issuances. Vanke expressed to the NAFMII its intention to issue a 28 billion-yuan shelf-type registered offering, and Gemdale submitted an application for a 15-billion-yuan shelf-style registered offering.
The “second arrow” effectively guides market institutions to improve their risk appetite and financing atmosphere for private enterprises, effectively alleviates the credit shrinkage of private enterprises, helps to promote the recovery of private enterprise financing, and reduces the financing costs of private enterprises.
As the “third arrow”, “equity financing” has been accelerated in anticipation, and some of the measures have achieved major breakthroughs in policy. The 5 adjustments and optimization measures for equity financing include: resuming mergers and acquisitions and supporting financing of listed real estate companies; resuming refinancing of listed real estate companies and listed real estate companies; adjusting and improving the listing policies of real estate companies in overseas markets; further utilizing REITs to revitalize the stock of real estate companies The role of assets; actively play the role of private equity investment funds.
The five measures are very comprehensive and will help to merge and reorganize out-of-risk real estate companies, speed up the resolution of risks in the real estate sector, and further expand corporate financing channels.
“Three Arrows Together” is mainly aimed at supply-side support for real estate companies and real estate project financing. It is worth noting that if the real estate market wants to stabilize and improve, it needs to form a joint force between supply and demand. The support policies for home buyers need to be further improved to continue to release demand and promote the improvement of market purchasing power. To enhance the confidence of homebuyers, we must first further promote the “Guaranteed Delivery of Buildings”. Only when the purchased housing can be delivered on time, people dare to buy a house. At the same time, it is also necessary to adjust and optimize existing policies according to city policies. For example, cities such as Xi’an and Chengdu recently adjusted purchase restriction areas, Hangzhou clarified that “recognize houses but not mortgages”, and the decline in down payment and mortgage interest rates in many cities will help To better meet rigid and improved housing needs.
It needs to be emphasized that increased financial policy support for the real estate sector is aimed at bailing out the industry and enterprises and helping the industry develop steadily and healthily, rather than encouraging the real estate industry to return to the old path of excessive growth. Many financial support policies specify in the provisions that they focus on supporting high-quality enterprises and using funds in specific areas. Therefore, real estate companies should make good use of a series of financial support policies, and learn lessons from past industry developments such as excessive leverage, excessive financialization, and unbalanced governance structures, and explore new development models.