Source: Interface
Riyue Bay, Hainan, China, a famous surfing destination.
One morning in mid-March, the sun covered the entire sea, and the waves pushed toward the beach. People wearing bikinis and holding surfboards of all colors walked towards the waves. The waves are rolling, some people are grabbing the waves to stand on the board, and some are galloping on the top of the waves.
A brown Beijing brand car followed the road along the coast towards the entrance of Sunac Sun Moon Bay. The owner from Beijing was stopped by the guard at the station and asked to report the license plate number to his homeowner consultant so that the homeowner consultant could apply for the passage of the car.
The security guard told the owner that at present Riyuewan implements strict access control, and the sales office is no longer open to the public. Only the staff and some villa owners who have already acquired the house can pass through, including prospective owners and others. It must be approved by superiors before it can pass.
Riyuewan implements strict access control. Picture source: Jiemian News
While waiting for passage, the owner communicated with people about the current situation of Riyue Bay on WeChat, “Yuedao is being demolished. It is said that they are in a lawsuit with related parties and want to return to the construction right.”
The follow-up direction of Riyue Bay has become one of the most concerned issues for prospective owners, which is directly related to the future residential experience and property value. Compared with the waves in Riyue Bay, Hainan’s environmental protection storm is longer and more powerful, and the demolition of Moon Island is a foregone conclusion.
This project, named Sunac Sunyue Bay, is Sunac’s masterpiece of entering Hainan. In 2015, Sunac flexed its muscles and successfully deployed multiple core cities in South China and Central China. In Hainan, Sunac acquired the Hainan project through the acquisition of a real estate subsidiary of Nanshan Group.
The business of Nanshan Group, a private enterprise in Shandong, covers industry, finance, aviation, real estate, education, tourism and other sectors. Its real estate platform Yantai Haiji Real Estate Co., Ltd. has developed a number of large-scale tourism and vacation complexes, such as Hainan Wanning Ridao and Yuedao, Qingdao Longdao and Fengdao.
At that time, Sunac acquired 50% of the shares of Hainan Wanning Hongji Real Estate Co., Ltd. and 50% of the shares of Nanshan (Hainan Wanning) Real Estate Co., Ltd. under Yantai Haiji, and established a subsidiary, Wanning Nanshan Sunac Industrial Co., Ltd., Responsible for project development.
Wanning Riyue Bay is a 3A-level scenic spot. According to the government’s plan, 26 billion yuan will be invested here to build a coastal tourist area and an international surfing base. The total planned land area of the Bay project is about 34,500 mu, and the total construction area is about 4 million square meters.
There are two main parts of Sunac’s involvement in the trader-part of the land parcels and the Sunyue Island reclamation project. Riyue Artificial Island is the core landmark project of Riyue Bay. It covers an area of 1 million square meters and is formed by reclamation.
At that time, Zhu Hong, the person in charge of Sunac Riyue Bay project, said to the public, “We want to build Sunac Riyue Bay into a world-renowned tourism brand, not just a real estate project.”
After Sun Moon Bay officially entered Hainan with Riyue Bay, Sunac began to attach importance to the tourism and vacation market in order to increase its efforts in Hainan.
In August 2016, Hainan Sunac and Hangzhou Jinhan entered into an equity transfer framework agreement to acquire 50% of the equity and creditor’s rights of the target company to obtain the Boao Golden Bay project.
Boao Golden Bay is located between Boao and Tanmen in Hainan, adjacent to the permanent site of the Boao Forum for Asia. The project includes residential and commercial uses, with a total area of approximately 1.6475 million square meters and a total saleable area of approximately 1.6475 million square meters. It is the first Hainan project to contribute to Sunac.
Also in the same year, Sunac established the Hainan area, and in December released its 6 projects in Hainan, namely Riyue Bay, Boao Golden Bay, Mission Hills, Sunshine Town, Blue Cube and Nanyan Bay. Most of them are tourism real estate projects that Sunac had rarely operated before.
In the first few years when the most severe “environmental protection storm” and “purchase restrictions” swept Hainan, Sunac’s development in Hainan was in full swing.
According to the financial report, as the eighth deep-growing area, the Hainan market brought 12.65 billion yuan in sales to Sunac in 2017. Sunac used this to surpass some real estate companies that have been in business for many years and squeeze into the top five in Hainan’s sales that year.
In the first half of 2018, Sunac’s deployment of projects in Hainan further increased, reaching nearly 20. They were deployed in Sanya, Haikou, Chengmai, Ding’an, Qionghai, Wanning, Lingshui and other places, forming a trend of enclosing Hainan. At the end of 2018, Sunac’s land reserves in Hainan reached 3,883,200 square meters, and its saleable/leasable building area reached 4,241,800 square meters.
This is the brightest moment of Sunac’s deployment in Hainan. At the 2018 interim results meeting, Sunac’s boss Sun Hongbin was also very optimistic about the Hainan market. He said, “We are particularly optimistic about Hainan, because places like China have very few choices. Policies will be good with or without policies. Good policies will definitely be better. We hope that Hainan will have particularly good development.”
But the good times didn’t last long. The environmental protection storm that began at the end of 2017 has swept across the country and has a particularly far-reaching impact on Hainan. The Central Environmental Protection Supervision Team severely criticized Hainan for “the finances of coastal cities and counties are overly dependent on real estate, and the situation is serious for the important land and the coastal land. A large number of real estate and tourism real estate are concentrated on the beautiful coastal line, which is very important to the marine ecology and the natural scenery of the coastline. “Causing damage” and other issues, and put forward opinions on environmental protection issues of many large-scale reclamation projects in Hainan, and gradually gave suggestions on rectification and punishment.
These projects are all hot star projects in the past, such as Ruyi Island in Haikou City, Southern Pearl, Phoenix Island in Sanya City, Haihua Island in Danzhou City, and Riyue Bay in Wanning City.
The environmental storm has put Hainan’s real estate on fire. Hainan has to get rid of its dependence on the real estate economy and seek a balanced development of ecological and economic construction. In 2018, Hainan issued the most stringent purchase restriction new policy in its history, and implemented strict controls on real estate. The property market in Hainan Island is frozen, “migratory birds” cannot fly in, and all real estate companies in Hainan are affected. They have begun to shrink the Hainan front, and Sunac is no exception.
The most intuitive manifestation is that Sunac abolished the Hainan region in October 2019 and merged with the Guangzhou-Shenzhen region to form the South China region. The new regional president is Huang Shuping, the former president of the Guangzhou-Shenzhen region, and Zhong Liansheng, the general manager of the Hainan region, was transferred. from.
It took about three years from the establishment of Sunac Hainan area to the merger. Under the combined effect of internal and external factors, Sunac’s new investment in Hainan has since decreased, and the corresponding land reserves have also declined year by year.
As of the end of 2020, among Sunac’s 258 million square meters of land bank, Hainan has a total area of only 1,967,900 square meters, with a saleable and leaseable building area of 3,448,700 square meters. Compared with the peak in 2018, land reserves have fallen by nearly 50%.
In the last round of the most stringent purchase restrictions and environmental protection storm in history, Sunac, the Riyue Bay project was hit hard.
Hainan Wanning Riyue Bay Comprehensive Tourism Resort is a key project in Hainan, including the benchmarking sun and moon artificial island, and the total reclaimed area of the project is 97 hectares. The sea area used for land reclamation and land reclamation on Rishima is about 48 hectares, the sea area for land reclamation and land reclamation on Tsukishima is about 493,000 square meters, and the land area formed by Tsukishima is about 435,000 square meters.
Photo source: Demonstration report on the use of the sea area of the temporary construction temporary bridge project of Wanning Yuedao Project
According to public information from the Wanning Municipal Government, the Yuedaowei reclamation project started construction at the end of 2013, and the steel bridge behind Yuedao was completed in December 2013 (it was demolished on December 6, 2018).
In 2015, without the approval of the marine environmental impact report, Yuedao started construction, which intensified the erosion of 1.7 kilometers of beaches on its southwest side. The erosion reached 22 meters at its widest point, which affected the provincial Qingpilin Nature Reserve. Cause a certain impact.
In 2016, Yuedao started the cofferdam. As of February 27, 2017, when the Hainan Provincial Department of Oceans and Fisheries ordered its construction unit to stop construction, the external cofferdam of the Yuedao Reclamation Project has been fully formed. Moreover, Yuedao did not actually stop illegal reclamation until the inspector was stationed. A large area of siltation has occurred on the surrounding beaches and island-connected sand dams have been formed, which has greatly damaged the natural features of the ocean.
Yuedao Reclamation and Cofferdam Picture Source: Wanning Yuedao Project Demolition Project Temporary Construction Temporary Bridge Project Sea Area Use Demonstration Report
On October 19, 2020, the Hainan Provincial People’s Government website announced the “Rectification Plan for the Implementation of the Inspection Report of the Third Central Ecological and Environmental Protection Supervision Team in Hainan Province” (hereinafter referred to as the “Plan”), proposing that the nine major encirclement and reclamation projects will be carried out. Project classification and disposal.
Regarding the renovation of Riyue Island, the “Plan” requires that by the end of 2020, the implementation plan for the demolition of the Yuedao project and the ecological environment assessment report should be prepared, and the demolition process, demolition material disposal, demolition construction period and other contents should be clarified, and expert review should be organized. Before the end of February 2021, the sea area use right of the Yuedao Project shall be withdrawn in accordance with the law, and the sea area use right certificate shall be cancelled. According to the law, the owner unit of the Yuedao project is ordered to demolish within a time limit in accordance with the implementation plan of the demolition project, and the Yuedao project will be demolished before the end of May 2022.
Jiemian News visited Riyue Bay in mid-March and found that the entrance to Moon Island was also banned, and the blue background and white characters all showed the determination of ecological protection-“Green water and green mountains are the golden mountains and silver mountains, fully implement environmental protection policies, and strengthen the ecological environment. protection”.
Entering the interior of the project through the cross-sea bridge, you can see that the bridge between Ridao and Yuedao has stopped abruptly in the sea. Excavators are digging through the ground and cofferdam of Yuedao, and Yuedao has begun to be demolished. An internal staff member of the project told Jiemian News that the demolition work started last week.
Image source of the junction of Ridao and Yuedao: Jiemian News
Moon Island is being demolished Image source: Jiemian News
In terms of input and output, there is undoubtedly a loss in the construction of the Riyuewan project. According to a previous report by China Business News, the total investment on the island is between 4 billion and 5 billion yuan, and nearly 1 billion yuan has been invested in the Yuedao project. But for this entire project, Sunac only sold the first and second phases of the island, and the return of funds was obviously not enough to cover the investment.
According to public information, Sunac delisted 9 plots of Ridao in 2015 for 1.328 billion yuan, with a total of 344,200 square meters, and planned a total of five phases of residential and island business districts.
The Riyuewan project opened in March 2017. The average price of high-rise apartments in the first phase of Ridao was 23,000 per square meter, and the average price of sky villas was 28,000 per square meter. After September 2017, the average price of the second-phase apartment is about 25,000/sqm, and the sea-view villa is 16-18 million/set. According to Sunac’s 2017 financial report, this project contributed 3.17 billion yuan in sales to Sunac that year.
An interview with Jiemian News found that the business district in the heart of Ridao Island has been built, but the investment promotion work has not been completed, and only a few merchants have settled in. In terms of residential housing, the remaining two-bedroom and three-bedroom houses in Phase II are sold in the form of commercial apartments, some buildings in Phase III are under construction, and Phase IV and Phase V have not yet been planned. The houses sold in the first and second phases are in the state of overdue delivery.
Image source of Nishima Island Center Business District: Jiemian News
An owner told Jiemian News that some villas have been delivered in the first and second phases, and the rest will be delivered by the end of June this year.
The Wanning Municipal Government’s “Announcement on the Implementation of the Rectification and Rectification Tasks of the National Marine Inspectorate (Serial No. 78)” stated that the type of sea used and approved for the Wanning Riyue Bay Sun Island Project is for tourism and entertainment, and clearly requires it “It is forbidden to reclaim land to develop ordinary real estate projects” However, after the completion and acceptance of the project, the Wanning Municipal Government changed the use of 5.6 hectares of reclamation for tourism for real estate construction.
At the same time, the “Publicity” pointed out that for the part of the built residential buildings on the island of Japan, the current project construction unit has signed a house trusteeship management agreement with Hainan Kaisheng Real Estate Co., Ltd., and Hainan Kaisheng Real Estate Co., Ltd. will carry out the construction of the completed residential products. Entrusted operation and management, changing residential products into quasi-operating products.
Quasi-operating products refer to the sale of commercial apartments to avoid the impact of purchase restrictions.
Regarding the rectification of the 3# residential building project that has been approved and not built on Ridao, the “Publicity” pointed out that the Municipal Assets Planning Bureau is going through the above-mentioned residential land use change procedures, and the modification plan for the single building of the 03 building on the 03 plot has not passed the expert review. .
With the beginning of the demolition of Moon Island and the change in the nature of the subsequent real estate projects on Ri Island, it is difficult for the Riyue Bay Project to resume its previous sales conditions, and the value of the properties sold will also be greatly reduced.
Compared with other developers who have been impacted by the environmental storm, the impact on Sunac is obviously greater. Danzhou Haihua Island, which was also required to rectify in 2017, paid the fines before the end of 2020. More than 30 commercial houses did not get the pre-sale certificates and were changed to self-owned. The rectification work has been basically completed.
At present, Haihua Island has sold 60,000 homes and is still launching new houses, with the average price rising to 20,000 yuan per square meter. For Evergrande, this super-large artificial tourist island has now started its trial operation after rectification, and will officially open its doors this year.
Vanke, the leading real estate company, has only Forest City and Maritime Metropolis on sale in Sanya, and Maritime Metropolis is close to the liquidation stage. However, Country Garden still has a large number of projects on sale in Hainan. Because they are far away from the coastline, they have not been affected by environmental storms. Currently, they are selling such projects as Country Garden Poly House, Country Garden Maritime Metropolis, Country Garden Xinglong Lakeside in Sanya Central CBD.
With inventory digestion and the Hainan land market shifting to the industrial and residential market, compared with Sunac’s passive digestion of real estate inventory, Vanke and Country Garden cater to the new direction of Hainan and have begun to shift to residential projects and commercial and industrial projects.
For example, in Sanya, in the past year, there were 47 land sales in Sanya, with a total transaction area of 1.461 million square meters and a total transaction volume of 14.77 billion yuan. Among them, the total land area for commercial use land accounted for the highest proportion, reaching 49.1%. Residential land accounted for 23%. The 7 parcels of land sold were all residential projects. Vanke took 2 cases and Country Garden took 1 case.
For Sunac, Riyuewan, the well-known travel brand dream they wanted to build at the beginning, has been impossible to realize, and what remains will be just an incompletely planned project that runs counter to the original idea.
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