The real estate agency construction model will become a new trend

The real estate industry, which is in the midst of a deep adjustment cycle, is expected to achieve a recovery and return to a stable and healthy development track with strong policy support. At the same time, some models that adapt to the new situation in the industry are gradually developing and strengthening from the past, such as the agent construction model in the real estate industry. The real estate construction agency model, also known as the light asset model, is characterized by the separation of investment and development. In the past, real estate development enterprises needed to obtain land through a large amount of financing for real estate development. Under the agent construction model, the agent construction enterprise accepted the commission of the investor, no longer financing for land acquisition, but only partially or fully participated in the design, development, management, and service of real estate. Through professional management and services, the construction agency outputs standard systems, product systems, brand systems, and resource systems, bringing value enhancement to the client through the output of these resources.

There is a widespread demand for the real estate agency construction model. China has proposed that in order to better solve the housing problems of new citizens and young people, 6.5 million units of affordable rental housing will be raised for construction in large cities with net population inflow during the 14th Five Year Plan period. The task of constructing affordable rental housing on this scale creates opportunities for the construction model. At the same time, China is still in the stage of increasing urbanization rate, with rural population entering cities, population mobility between cities, and as China enters the stage of urban renewal, real estate development and construction tasks will continue to arise. The development and construction management of large state-owned enterprises and urban investment companies after acquiring land can be undertaken and completed by real estate development enterprises with rich development experience in a construction mode.

From international experience, specialization and division of labor are the general trend of the development of the real estate industry, and the light asset construction model conforms to the trend of differentiation in real estate development. Taking the United States as an example, every subdivision of real estate development involves corresponding investors, developers, contractors, and operators. And the light asset model is relatively common in the real estate development field, with reports showing that the three major real estate giants in the United States operate under the light asset model.

The construction agency business has become a new direction for Chinese real estate enterprises to respond to the current industry adjustment. Green City Management Group, which entered the construction agency business earlier, has been exploring the light asset field for more than 10 years. Since the beginning of this year, many real estate companies have announced their entry into the construction agency business, such as Longhu Group's launch of the "Longhu Longzhi Manufacturing" construction agency business segment. According to statistics, there are currently over 40 real estate development enterprises, including some large leading enterprises, laying out construction agency business.

Faced with the high cost of acquiring land in hot cities, coupled with the current tight liquidity situation of some real estate enterprises, independent land development is becoming increasingly scarce in the face of insufficient financial strength. Developing the market through a construction agency model is a new choice. Since the beginning of this year, providing agent construction services for local urban investment companies and providing relief agent construction services for distressed real estate enterprise projects have been the main sources of market growth for agent construction. Although the proportion of construction agency business in the entire real estate industry is not large, due to its light asset characteristics, it can maintain a low leverage ratio, resulting in a low debt ratio. At present, some real estate companies have relatively considerable profit margins in their construction agency business.

Developing a construction agency model helps development enterprises focus more on improving project development efficiency and quality. The agent construction model is a reflection of the transition of real estate enterprises from integrating functions such as financing, land acquisition, development, and construction in the past to specialization and detailed division of labor. Due to the separation of investment and development in the agent construction model, the client and investor focus on controlling investment returns and risks, while the agent can focus on the project construction itself, which can concentrate more energy on improving the quality of project construction.

The development of the construction agency model requires the construction agency to further enhance its management capabilities and form a good brand reputation. Industry insiders expect that although some companies that have already engaged in construction agency business have decent profits, as the construction agency field enters a rapid development period, more companies will enter the construction agency market, and the scale of the construction agency market will further expand. Market competition will also become more intense, and the yield may decrease. To win in fierce competition and further expand and strengthen, construction agency enterprises need to build a good reputation for both investment entities and homebuyers. Standardizing the development process and service content will enhance the efficiency of the entire business model, making it easier for investors and consumers to make choices and gain better returns. At the same time, it is necessary to establish unified construction and delivery standards, as well as meet a wider range of customer needs in the market. As a new direction of development in the real estate industry, support from local governments and industry norms are also essential.