TOD (public transport-oriented real estate development model), an important track in the second half of real estate, is becoming a breakthrough for head real estate enterprises to increase their operation. Some institutions predict that the market size of TOD will reach 5 trillion in recent years.

With its financial strength and comprehensive development experience, a central enterprise has seized the first opportunity-on March 20, China Resources Land revealed for the first time that it had landed 76 TOD complexes, distributed in 31 subway cities, with a construction area of more than 35 million square meters, covering more than 90 subway lines.

In addition, from the public data, Longhu has held more than 60 TOD projects, Vanke has a layout of nearly 50, China Resources Land in the layout number surpassed Longhu and Vanke.

All three are already leading players in the TOD field. In addition to them, Poly, Country Garden Holdings, Greenland, Investment Shekou, Greentown, Yuexiu and other more than 20 real estate enterprises, have also gone deep into the TOD track.

Zhu Jiusheng, president of Vanke, said that TOD used to be a bonus question for developers, but today it has become a must-answer question. Longfor Group CEO Shao Mingxiao said bluntly that Longhu did business aimed at the TOD model.

However, different from the traditional real estate development, the TOD project has both development and operation, which has a long cycle, large investment and high difficulty, which not only puts forward ultra-high requirements for the strength of real estate enterprises, but also brings different risks.

The forerunner and the dividend of central enterprises

TOD is often related to the planning, image and development of a city or region, and the role of local government and rail transit companies is very important, while the identity of central enterprises has given China Resources Land a lot of convenience to participate in large-scale urban landmark complex, large-scale urban renewal and the construction and operation of large-scale urban stadiums. The investment and development of TOD complex is embedded in the super-large projects of these cities.

Over the past 18 years, China Resources Land's Shenzhen China Resources Center, Chengdu Vientiane City Phase II, Shanghai Vientiane City, Qingdao China Resources Center and other TOD have been developed and have become local landmarks.

Since 2016, the layout of China Resources Land's TOD project has been significantly accelerated, with an average annual growth rate of 8-10 projects.

Li Xin, president of China Resources Land, introduced three development models of TOD. One is the track cover TOD complex mode. For example, the first TOD depot in China will build a large-scale urban complex, Shanghai Vientiane City.

In June 2010, China Resources Land obtained 50% equity and development leadership of Wuzhong Road parking lot project company from Shanghai Shentong Metro through public bidding for comprehensive development. Shanghai Vientiane City opened in September 2017, with a total floor area of 530000 square meters, including shopping malls, office buildings, hotels, museums and other industries.

The second is the mode of station-city integration TOD complex. This model can be subdivided into three types: the first is the old renovation of TOD-driven cities, the second is TOD-driven new town construction, and the third is TOD-driven industrial upgrading.

The third is the TOD complex mode of three-dimensional super transportation hub. China Resources Land created the China Resources Land Center of Beijing Daxing International Airport, the first comprehensive business supporting service project integrated with the airport in China.

Compared with obtaining the project from the auction market, it is cheaper to obtain the TOD project through equity investment, urban renewal, cooperation with the government and so on.

CITIC believes that China Resources Land's diversified land acquisition capacity has been remarkable in recent years. For example, 82 new projects were added in 2019, of which 30 were acquired through urban renewal, cultural and sports industry coordination, asset customization, TOD cooperation and other channels, effectively controlling the upward cost of land.

The second growth curve of housing enterprises

Over the past few decades, the core business of Chinese real estate has been residential development, with the model of "buying land, building houses and selling". The focus of competition is cost, scale and speed.

With the arrival of the ceiling of the scale of the new housing market, and the high land price, the traditional development model and land acquisition model have been unable to meet the needs of developers.

TOD model has been paid more and more attention by many real estate enterprises, because it can not only take land at low prices on a large scale, occupy urban traffic location dividends, but also help developers transform their operations.

In addition to China Resources, Longhu, Vanke, Greenland, Country Garden Holdings and other head housing enterprises have already begun to seize TOD.

As early as 2003, the first shopping center in Longhu, Chongqing Beicheng Tianjie, opened, when the first rail transit in Chongqing was under construction at the same time, which was the starting point for Longhu to explore the TOD model.

By the end of June 2020, Longhu has held more than 60 TOD projects, with TOD as the core of the full-format development area of more than 9 million square meters.

At the end of last year, the Longhu TOD hub urban complex "Chongqing Longhu Lightyear" opened with a total volume of more than 480000 square meters, targeting international well-known TOD projects such as Shibuya in Tokyo and Ratterfense in Paris.

Kerry Securities believes that Longhu usually adopts an independent development model, already has a professional TOD team, and smooth coordination and communication with the local government and rail transit companies.

Vanke, which is transforming urban and rural construction and life service providers, will not miss the TOD feast. In the dispute over Wanbao in 2015, Vanke introduced Shenzhen Railway for the first time and proposed to increase the track property.

Zhu Jiusheng, president of Vanke Group, said that Vanke has a variety of advantages in the field of TOD. For example, after Shenzhen Railway bought a stake in Vanke, in April 2020, Vanke acquired the vehicle depot construction project in Foshan together with Shenzhen Railway Group companies; through more than 40 projects, Vanke explored many types of government-enterprise operation modes covering BOT, BT, EPC and so on.

In August last year, Zhu Jiusheng said that TOD is the focus of Vanke's investment, and it has won a total of 49 TOD projects, involving a construction area of 18.03 million square meters, with a total investment of 240 billion yuan.

Vanke has been exploring the transformation for 9 years since it first put forward the "Silver Age" and started the transformation in 2012. Yu Liang said frankly that Vanke has been looking for a "second curve" of growth, and the heads of various transformational business sectors are under great pressure.

Among many diversified businesses, TOD development and urban renewal are paid special attention by Vanke and are regarded as the breakthrough point of the second growth curve. The reason is that the acquisition of mainstream urban land resources is increasingly dependent on large-scale projects and monopoly land acquisition. Through urban renewal and TOD, Vanke can obtain the operation capacity and asset management capacity of urban areas, and then gain the favor of local governments and obtain more resources.

The prospect is good, but the threshold is too high.

The real estate research institute of Yiju and the TOD Research Center of Southwest Jiaotong University (Shanghai) reported that the development of the superstructure of urban rail transit vehicle bases across the country will bring about 240 million square meters of development space and the market size will reach 5 trillion yuan.

In recent years, under the overall deployment of the State Council, the Ministry of Housing and Construction, the Ministry of Natural Resources and other departments, cities with rail transit in China have issued relevant policies on TOD development, bringing opportunities for developers to explore new growth points.

Up to now, nearly half of the 40 cities that have opened rail transit in China have issued the TOD development policy.

In the opinions on the implementation of the "five new cities" recently issued by Shanghai, it is clearly put forward to improve the development intensity of the new town and support the TOD mode around the high-intensity development site and other policies. This is interpreted to mean that housing enterprises with TOD development experience will take the lead in the construction of a new round of new towns in Shanghai.

However, the TOD project is mainly located in the advantageous areas of the traffic centers of first-and second-tier cities, with scarce land resources and a high threshold for total land prices. since the second half of 2019, the total transaction price of TOD plots is not low, most of which are nearly 10 billion yuan.

In addition, the TOD project not only puts forward higher requirements for developers' professional technology and development and operation experience, but also involves multi-interest coordination. Generally speaking, the TOD project will involve the government, the subway company and the housing enterprise. balancing the interests of all parties determines whether the TOD project can be landed smoothly.

At present, the real estate enterprises that can be involved in the field of TOD development on a large scale have a skill and can show their own skills.

For example, as a central enterprise, China Resources has experience in urban investment and operation and large-scale project operation, can participate in the overall planning, development, construction and operation of urban areas, and can cooperate efficiently with local governments.

Longhu has the soundest financial position among private housing enterprises. by the end of June 2020, Longhu maintained a low average borrowing cost of 4.5%, with an average loan life of 6.45 years, allowing Longhu to sink down for longer-cycle development and operation.

After Vanke has become the first major shareholder in Shenzhen Railway, it is more convenient to communicate and balance interests with the MTR Corporation, and Vanke's diversified business capabilities, asset management and operation capabilities are also a strong blessing.

Although the market potential of TOD development model is huge, it is clear that this is more of the stage for head housing enterprises, central enterprises or state-owned enterprises, and it is difficult for small and medium-sized housing enterprises to participate in sharing dividends. Zhu Jiusheng said that this "housing enterprise must answer", many developers may not even have the qualification to answer the question.