Abstract:
The Report on M&A decision in Real Estate Industry
1. The Profile on real estate industry
The real estate price experienced surging in 2005 upon what has been achieved in 2004, which drives up national economy. A set of policies were laid out by Central Government to stabilize housing price. So far, the effort has been paid off as skyrocketing house price slowed down.
The policy has exerted its influence in 2006 with RMB 1.35792 trillion being allocated in this sector lowering 13.9%. In that sense, the regulation put out by the State showed affect on adjusting investment in this sector and housing price.
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The real estate industry will be under the control of national policy in 2007. Just as China’s real estate industry has been shifting from being industry-oriented to public-oriented, this sector is in revolutionary stage on its journey in 2007. With number of policies committed to housing supply structure, curbing price, strengthening land control and pushing forward affordable house, real estate industry will break away from high-profit seeking in single-minded manner while give more concern on corporate governance, image-building campaign, and business performance and identifying the long term need from market.
2. The Motives of M&A in real estate industry
At present, there are lots of small companies in this decentralized market in limited capital scale. Even the China National Real Estate Development Group Corporation as the guru in this sector has property of RMB 60 billion, which features great distance from industrialized nations. Therefore, Heading Century believed that it’s a way out for big real estate company taking over small one to optimise and integrate market resources. With M&A, the cost will be brought down and leading position will be formed.
Case Study in Real Estate Induustry
|
Time |
Party involved |
Case in Brief |
|
2005 |
OCTRE and Union Developing Group of China |
Union Developing Group of China is a limited company with multiple shareholders. State Council delegated SASAC to perform its obligation as investor to transfer 12.09% of state-owned stock to OCTRE. |
|
2006 |
Shenzhen International Holdings Limited and Coastal Corporation |
Shenzhen International Holdings Limited purchased convertible bonds worth of USD 40 million from Citadel Equity Fund Ltd with USD 65.60 million equivalent to HKD 0.51 and 7.32% of stock of Coastal Corporation from Citadel with HKD 0.146 billion. |
|
2006 |
Zhongfang Real Estate Co. Ltd. and Xuzhou Tianjia Real Estate |
Zhongfang Real Estate Co. Ltd. signed a agreement with Tianjin Zhongwei Commerce and Trade Co., Ltd to purchase its 78% of stock in Xuzhou Tianjia Real Estate with RMB 1.611296 trillion. |
|
2006 |
Century 21 China Real Estate and Bonity |
Century 21 China Real Estate purchased 22 outlets form Bonity. After acquisition, All presents of Bonity will gathered under the umbrella of Ruifeng Real Estate Development (Shanghai)Company committed by Century 21 China Real Estate. The name is 21 China Real Estate- Ruifeng Real Estate Development Company |
|
2006 |
|
COSCO International Holdings Limited purchased 20% and 4% of stock in COSCO Real Estate Development Co., from COSCO and COSCO Tianjin with RMB 329,400,000 and RMB 65.88 million respectively. Purchase price was paid by internal resources. After the deal, COSCO International Holdings Limited will expand its share in COSCO Real Estate Development Co., from 20% to 44%. |
|
2006 |
Vanke and Beijing Wanchao Real Estate |
With RMB 389,000,000Vanke purchased 60% of stock from Wanchao Real Estate held by State Asset Commission in Chaoyang District, Beijing, staking out territory of 73,620,000 Km2 in Beijing and Dongwan for real estate development. |
|
2006 |
Prudential Equity Group and Shengzhen Commercial Real Estate |
A strategic agreement was signed by Prudential Equity Group and Shengzhen Commercial Real Estate, in which Prudential Equity Group purchases 50% of stock of commercial real estate projects from Yijing Central Walk with RMB 1 billion. |
3. M&A trend in China’s real estate industry
Based on industrial character and status quo in real estate industry, Heading Century made number of analyses as followed:
A. Integration between big company and small one. Some small real estate developers can not work as normal due to credit capability for their short of capital though enjoyed piece of land coupled with intensified efforts from national macro-economic policy to deal with hoarding land phenomenon. Under this circumstance for those developers who have land as hand but less capital to keep their land is to put it into market. At the same time, the restriction of loan and credit has made small firm relinquish or transfer their projects. Heading Century believed that this situation made the small company to partnered with big one for common development.
B. Acquisition. Many big real estate companies are accepted within the community for their strong capital back-up, wide array of channel for finance-seeking and well-established managerial techniques. For their own development, big real estate companies will grab the opportunity to take over the small companies and their projects as to expanding their scale. It’s the best way to break the bottleneck for growth.
C. Regional consolidation. HEADING-CENTURY believed that it’s inevitable for group operation prevalent in regional integration. Joint capital and comprehensive operating mechanism is supposed to manage to obtain land for real estate development through open tender and auction when the way to get small pieces of land is narrow. Joint capital and group operation prove effective for small real estate companies. Acquisition based on strategic cooperation to get land will on the rise.
D. M&A by Foreign. The foreign real estate companies that are featured with enough capital, favorable finance-seeking channel, good quality of house and service and well-established managerial savvies will take over China’s counterparts that are left behind in all aspects. M&A will help foreign participate into China’s real estate industry pretty quick.
E. Policy take-over. The market-oriented take-over will be the main- stream though China National Real Estate Development Group Corporation was born with the efforts of State policy. The M&A among state-owned companies will step forward with unbearable pressure from State-owned asset, cash circulation in land, inventory and sale, process development funds and developing code. Reshuffle within real estate industry, M&A and centralization will be geared up.
Content:
The tendency analysis report on M&A in real estate industry in China between 2006 and 2007
Chapter 1 Overview of research
Section 1 Background of the research
Section 2 Contents of the research
Section 3 Method over the research
Section 4 Team for the research
Section 5 Conclusion for research
Chapter 2 The Status Quo of Real Estate Industry Overseas
Section 1 Section 1 the Character of foreign real estate industry
Section 2 The Demand and supply in foreign real estate industry
1. Demand and supply of commercial housing
2. Demand for commercial housing
Section 3 Competition in foreign real estate industry
Chapter 3 The Status Quo in China’s Real Estate
Section 1 Investment of Real Estate between 2006 and 2007
1. Market scale of China’s real estate industry
2. Fix asset investment and profit in real estate industry
3. Investment model
Section 2 The Status Quo of development in China’s real estate industry between 2006 and 2007
1. Land approval
2. Demolition
3. Land planning and construction
Section 3 Sales in real estate industry between 2006 and 2007
1. House price
2. Sales
Chapter 4 Investment Policy Environment of China’s Real Estate Industry
Section 1 Macro-economic policy
Section 2 New policy set for real estate industry
Chapter 5 The Factor Exerting Influence on Real Estate Industry
Section 1 The Risk of development in real estate industry
1. Macro-economy
2. Regional industrial policy
3. Finance-seeking policy
4. Land resources distribution
5. Building cost
Section 2 The existing problem in real estate industry
Chapter 6 The Status Quo of Industrial Clusters and competitiveness in China’s Real Estate Industry
Section 1 North-eastern region
1. The Demand of regional real estate industry between 2007 and 2010
2. The development character and industrial pattern of regional real estate industry
3. Regional competition and major player in real estate industry
4. M&A trend and feasibility of regional real estate industry
Section 2 Northern China
1. The Demand of regional real estate industry between 2007 and 2010
2. The development character and industrial pattern of regional real estate industry
3. Regional competition and major player in real estate industry
4. M&A trend and feasibility of regional real estate industry
Section 3 Eastern region
1. The Demand of regional real estate industry between 2007 and 2010
2. The development character and industrial pattern of regional real estate industry
3. Regional competition and major player in real estate industry
4. M&A trend and feasibility of regional real estate industry
Section 4 Central China
1. The Demand of regional real estate industry between 2007 and 2010
2. The development character and industrial pattern of regional real estate industry
3. Regional competition and major player in real estate industry
4. M&A trend and feasibility of regional real estate industry
Section 5 Southern region
1. The Demand of regional real estate industry between 2007 and 2010
2. The development character and industrial pattern of regional real estate industry
3. Regional competition and major player in real estate industry
4. M&A trend and feasibility of regional real estate industry
Section 6 Southwest region
1. The Demand of regional real estate industry between 2007 and 2010
2. The development character and industrial pattern of regional real estate industry
3. Regional competition and major player in real estate industry
4. M&A trend and feasibility of regional real estate industry
Section 7 Northwest region
1. The Demand of regional real estate industry between 2007 and 2010
2. The development character and industrial pattern of regional real estate industry
3. Regional competition and major player in real estate industry
4. M&A trend and feasibility of regional real estate industry
Chapter 7 The Status Quo of M&A in China’s Real Estate Industry
Section 1 The Background of M&A in China’s Real Estate Industry
Section 2 The Current M&A in China’s Real Estate Industry
Section 3 The Case study of China’s Real Estate Industry
Section 4 The M&A trend character in China’s Real Estate Industry
Chapter 8 The Stumbling Stone on M&A in China’s Real Estate Industry
1. Policy
2. Capital
3. Land resources
Chapter 9 The Case Study of M&A in Foreign Real Estate Industry
Section 1 Morgan Stanley reorganized Gemdale
1. Background and value of M&A
2. Procedure and solution of M&A
3. Strategic development in post M&A phase
Section 2 Keppel Land purchasing Dragon Land
1. Background and value of M&A
2. Procedure and solution of M&A
3. Strategic development in post M&A phase
Chapter 10 M&A Trend of Foreign Real Estate Industry upon China’s Counterparts
Section 1 the Development of foreign real estate companies in China
1. Investment
2. Targeted area for investment
3. Market performance
4. Investment structure
5. Investment trend
Section 2 The Investment and M&A of KAINDL in China
1. The Investment of KAINDL in China
2. Core competitiveness of KAINDL
3. M&A and feasibility of KAINDL
Section 3 The Investment and M&A of ING in China
1. The Investment of ING in China
2. Core competitiveness of ING
3. M&A and feasibility of ING
Section 4 The Investment and M&A of Morgan Stanley in China
1. The Investment of Morgan Stanley in China
2. Core competitiveness of Morgan Stanley
3. M&A and feasibility of Morgan Stanley
Section 5 The Investment and M&A of TollBrothers in China
1. The Investment of TollBrothers in China
2. Core competitiveness of TollBrothers
3. M&A and feasibility of TollBrothers
Section 6 the Investment and M&A of Keppel Land in China
1. The Investment of Keppel Land in China
2. Core competitiveness of Keppel Land
3. M&A and feasibility of Keppel Land
Chapter 11 The Case Study of M&A in China’s Real Estate Industry
Section 1 OCTRE reorganized Union Developing Group of China
1. Background and core value of M&A
2. Procedure and solution of M&A
3. Strategic development of M&A
Section 2 Salimhome purchasing COSCO Group
1. Background and core value of M&A
2. Procedure and solution of M&A
3. Strategic development of M&A
Section 3 Hopson purchasing Guangdong Pearl River Investment
1. Background and core value of M&A
2. Procedure and solution of M&A
3. Strategic development of M&A
Section 4 Shanghai Lujiazui Real Estate Broker Co.,Ltd purchasing Shanghai Gaoqin
1. Background and core value of M&A
2. Procedure and solution of M&A
3. Strategic development of M&A
Chapter 12 Competitiveness among Major Players in China’s Real Estate Industry
Section 1 OCTRE
1. Capital operation
2. The Way to possess Land
3. Management over construction quality
4. Marketing team
5. Trend and feasibility of M&A
Section 2 Lujiazui
1. Capital operation
2. The Way to possess Land
3. Management over construction quality
4. Marketing team
5. Trend and feasibility of M&A
Section 3 Beijing Konggang High-Tech Park Co.,Ltd.
1. Capital operation
2. The Way to possess Land
3. Management over construction quality
4. Marketing team
5. Trend and feasibility of M&A
Section 4 Yatai Group
1. Capital operation
2. The Way to possess Land
3. Management over construction quality
4. Marketing team
5. Trend and feasibility of M&A
Section 5 COSCO Shanghai
1. Capital operation
2. The Way to possess Land
3. Management over construction quality
4. Marketing team
5. Trend and feasibility of M&A
Section 6 Dahua Group
1. Capital operation
2. The Way to possess Land
3. Management over construction quality
4. Marketing team
5. Trend and feasibility of M&A
Section 7 Beijing Capital Development Holding (Group) Co., Ltd
1. Capital operation
2. The Way to possess Land
3. Management over construction quality
4. Marketing team
5. Trend and feasibility of M&A
Section 8 China Resources Land Limited
1. Capital operation
2. The Way to possess Land
3. Management over construction quality
4. Marketing team
5. Trend and feasibility of M&A
Section 9 Sun Hung Kai Properties Ltd.
1. Capital operation
2. The Way to possess Land
3. Management over construction quality
4. Marketing team
5. Trend and feasibility of M&A
Section 10 Hopson
1. Capital operation
2. The Way to possess Land
3. Management over construction quality
4. Marketing team
5. Trend and feasibility of M&A
Chapter 13 Possibility of M&A in Big Real Estate Companies
Section 1 Real estate policy
Section2 Competition and changed pattern among big real estate developers
Section 3 Profitability and its trend among big real estate developers
Section 4 Strategic development of big real estate developers
Chapter 14 Possibility of M&A in Medium and small real estate developers
Section 1 Competition and changed pattern among small real estate developers
Section 2 Profitability and its trend among small real estate developers
Section 3 Capital operation in small real estate developers
Chapter 15 Risk of M&A in China’s Real Estate Industry
Section 1 National policy
Section 2 Macro-economic development
Section 3 Regional barrier from local government
Section 4 Loan risk
Chapter 16 Recommendation for China’s Real Estate Industry
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