The Zhitong Finance App learned that Dongwu Securities released a research report saying that policies relating to urban villages were issued in many places after the National Standing Committee meeting in July. The Ministry of Housing and Construction's urban reform system has already stocked 162 projects. It is expected that urban village renovation will promote more implementation measures in the fourth quarter. This round of urban village transformation represents a new development path of “focusing on security and people's livelihood” in the era of stock, and is expected to have a significant boosting effect on both real estate development and investment and commercial housing sales. Local state-owned enterprises with experience in urban village renovation and rich local resources are expected to take the lead in benefiting.
Key recommendations:Urban Construction Development (600266.SH), Yuexiu Real Estate (00123), Pearl River Co., Ltd. (600684.SH). Recommended attention: Chinese Enterprises (), Tianjian Group (000090.SZ). 600675.SH
Incidents:On October 24, the “Guangzhou Urban Renewal Special Plan (2021-2035)” and “Guangzhou Urban Village Renovation Special Plan (2021-2035)” (hereinafter referred to as the “Plan”) were reviewed and approved by the 14th Regional Planning Professional Committee of the 4th Guangzhou Municipal Planning Commission. This plan was officially publicly solicited for public comments on February 6 this year, and it is also the third time since 2009 that Guangzhou has updated its master plan.
The main views of Dongwu Securities are as follows:
The “Plan” focuses on clarifying the scale and timing of the update, and exploring and improving the housing ticket placement mechanism.
(1) According to the “Plan”, a total of about 130/2.3/3 million square meters of urban renewal will be promoted by 2025/2030/2035 (including 70/120/1.55 million square meters of urban village renovation). The “Plan” specifies 291 comprehensive renovation and mixed renovation projects for old villages and old towns to be promoted by 2035. Among them, there are 252 comprehensive old village renovation projects (including 150 urban village projects), 24 old village mixed renovation projects (including 15 urban village projects), where “demolition, treatment, and revitalization” are promoted together; 15 old city mixed renovation projects are being promoted using a comprehensive “retention, reform, and demolition” method. (2) The “Plan” clarifies the positive and negative list of projects to avoid major demolition and “sporty” updates in a short period of time. (3) The “Plan” proposes strategies such as optimizing cost accounting and expropriation standards, exploring housing ticket placement policies and mechanisms, and broadening funding channels for urban village renovation.
Policies relating to urban villages were issued in many places after the National Standing Committee meeting in July. The Ministry of Housing and Construction's urban reform system has already stocked 162 projects. It is expected that urban village renovation will promote more implementation measures in the fourth quarter.
On July 21, 2023, the National Standing Committee adopted the “Guiding Opinions on Actively and Steadily Promoting Urban Village Renovation in Megacities”. Since then, cities such as Shanghai, Changchun, and Zhengzhou have followed up implementation. Among them, on August 16, the Guangzhou Municipal Housing and Construction Bureau proposed that Guangzhou promote at least 127 urban village renovation projects this year. Nationwide, according to a report by CCTV, the Ministry of Housing and Construction's urban village renovation information system has been in operation for two months, 162 urban village renovation projects have been put into stock. The bank expects more rules on urban village renovation policies to be implemented in the fourth quarter to accelerate the pace of progress.
Urban village renovation is expected to be a powerful gripper for boosting real estate investment and commercial housing sales.
(1) In terms of investment: National real estate development investment in 2022 was 13.3 trillion yuan, down 10.0% year on year; January-September 2023 was 8.7 trillion yuan, down 9.1% year on year. A decline in investment volume for 2 years in a row is also rare in history. Under the current real estate situation, it is difficult for investment amounts to be reversed next year. The bank believes that urban village renovation is expected to hedge against the decline in real estate investment next year and will have a certain driving effect on overall investment. (2) On the sales side: The traditional “demolition and restoration” resettlement model only creates the supply of commercial housing and does not create demand. If the housing ticket placement system proposed in the Guangzhou “Plan” can be implemented nationwide, some housing ticket placement is implemented while maintaining a certain relocation ratio. It will create a large amount of demand for home purchases on the basis of safeguarding people's livelihood, driving a steady recovery in the real estate sales market. In the current situation where sales sentiment is declining, the certainty that housing ticket placement brings about demand for home purchases is even higher than that of monetized placement.
Risk warning:The implementation of the urban village renovation policy is progressing unexpectedly; the industry continues to decline and sales fall short of expectations; the industry's credit risk continues to spread, and the deterioration in liquidity exceeds expectations.