In 2023, the sales area of commercial housing in the country will hit a new low in the past decade, and the total sales of the top 100 real estate companies will decline by more than 15% year-on-year.
At the time of the reshuffle of the real estate industry, the subway company quietly sat on the table and became an invisible "new real estate force".
According to the statistics of the E-House Research Institute, 7 of the 31 metro companies that have published their annual reports have announced real estate development revenues, of which Suzhou Rail Transit, BIIC (the parent company of Beijing Metro), Chengdu Rail Transit and Guangzhou Metro will all have a year-on-year increase of more than 40% in real estate development revenue in 2023, far exceeding the average level of the real estate industry.
Among them, the income of the two subway companies from the sale of houses exceeded 10 billion.
Shenzhen Metro, which has titles such as "the king of profitability of subway companies" and "the subway company that is most capable of engaging in sideline business", holds 100 billion yuan of land reserves, and although its real estate development income declined last year, it still reached 14.7 billion yuan, contributing more than 58% to its overall revenue. In addition, BIIC's annual real estate revenue in 2023 will also exceed 10 billion yuan, reaching 11.32 billion yuan.
Last year, the real estate income of Chengdu Rail Transit was 9.99 billion yuan, which was also close to 10 billion yuan, a year-on-year increase of 60%. Suzhou Rail Transit's real estate development revenue increased the most, with an annual revenue of 3 billion yuan, a year-on-year increase of 124%. Guangzhou Metro's real estate revenue was 2.47 billion yuan, a year-on-year increase of 41%.
The emergence of these subway companies is inseparable from the TOD development strategy they have adhered to for many years. The TOD model, or Transit Oriented Development, refers to the establishment of urban areas integrating work, commerce, culture, education, and residence, with public transportation such as subways and light rails as the center.
In everyone's impression, the main responsibility of the metro company is to ensure the safe and efficient operation of urban rail transit. Now they are all doing "real estate side business", behind which is actually an insoluble profit pressure.
A conventional subway company's main revenue and profit comes from the passenger service of the subway itself. Due to the high cost of pre-construction and post-maintenance of the subway, the overall payback period is long, and the subway fare needs to consider the public interest, so the toll will not be too high. Therefore, relying solely on subway operations, the subway company is far from being able to break even.
A comprehensive review of the 2023 annual reports of 31 metro companies shows that except for Shenzhen Metro, Shentong Metro, and Changzhou Metro, the difference between the total operating income and the total operating cost of most metro companies is negative.
However, there are also subway companies that are still in a state of loss even if they count government subsidies, such as Lanzhou Rail Transit losses of 653 million yuan after adding government subsidies, Foshan Metro losses of 119 million yuan, and Shenyang Metro losses of 72 million yuan.
In order to feed back the construction and operation of rail transit, in recent years, more and more metro companies have opened the "rail + property" model to develop real estate and property above rail transit stations.
This model of "raising iron with housing" has indeed achieved good results. In 2023, the gross profit margin of Shenzhen Metro's metro railway operation and design segment will be -23.06%, while the gross profit margin of the station-city integrated development segment will be as high as 37.4%.
During the turbulent period of the real estate industry, market volatility has also brought challenges to some metro companies' real estate projects. In 2023, the real estate development income of Qingdao Metro and Wuhan Metro will both decline year-on-year. In particular, the real estate development income of Wuhan Metro was only 180 million yuan last year, a drop of 97%.
Under the new situation, the metro company also needs to integrate advantageous resources, accelerate the exploration of a new development model of "rail + property", and seek greater profit growth points.