The real estate tycoon's cross-border medical care, the top 10 Chinese real estate companies are all in the game, what are they doing? Can it work?

On the first day of July, there was news that a real estate company had entered the medical track.

This time, the protagonist is Greenland Holdings, which established Greenland Medical Industry Group and signed strategic cooperation agreements with Jointown and United Imaging Medical. The cooperation with the former is focused on distribution and hospital supply chain management (SPD) business; With the latter, it is to go to sea together and cooperate to develop Central Asian markets such as Kazakhstan.

Greenfield is not the first crossover player. As we all know, in recent years, the economic environment has been extremely unfriendly to the real estate industry, and the plummeting market value and tight cash flow have become common problems.

Cross-border, where to cross? The decline in the housing market is not unrelated to the decline in population growth, while the healthcare sector can significantly benefit from an ageing population. One yin and one yang, entering the big health has become the unanimous choice of real estate companies.

In terms of sales in 2023, the top 10 real estate companies are Poly Development, China Overseas Real Estate, Vanke, Greentown China, China Resources Land, China Merchants Shekou, C&D Real Estate, Binjiang Group, Yuexiu Real Estate, and Longfor Real Estate.

All of these companies have a layout in the field of big health, without exception.

Over the past few years, some of the cross-border real estate companies have succeeded and some have failed, but more cannot be concluded for the time being. It's just that at present, the industry is recognized that none of these companies have successfully "entered" the core of the industry, and they are just gathering on the periphery to "tickle".

Big health is the "second curve" of real estate enterprises?

One of the characteristics of the real estate industry is that it is asset-heavy, and even if it crosses over to the big health industry, this business inertia is still in play.

According to the data, in addition to distribution, supply chain management and going overseas, the Greenland Medical Industry Group, which was established the day before yesterday, will also rely on the industrial content of Greenland Group to accelerate the preparation and implementation of projects such as hemodialysis centers, medical complexes, and medical and pharmaceutical industrial parks, and further improve the business layout of the medical industry.

Hemodialysis centers, medical complexes, and industrial parks are all out-and-out high-investment, asset-heavy projects.

As early as 2021, Greenland Group's medical and health brand "Greenland Youkang" was announced, and the "Jing'an District Qicaili Greenland Youkang Medical and Health Complex" located in the central area of Shanghai was officially opened at the same time. The complex project has a construction area of about 4,000 square meters, introduces advanced medical equipment, diagnosis and treatment technology and management concepts, and carries out special projects such as traditional Chinese medicine conditioning, chronic disease management, and health management.

At that time, the "Greenland Youkang" medical and health brand also announced that it was accelerating the national settlement, and striving to complete the layout of key cities in the country within three years.

The layout of comprehensive entities such as hospitals and pension real estate is often the first step for real estate enterprises to transform into cross-border medical care, and almost all real estate companies that can be named are inevitably vulgar.

In 2021, Longfor Group opened and operated the first Ruihaibei Rehabilitation Medical Center in Chongqing, leaving a son in the field of rehabilitation medicine. In the same year, it announced the acquisition of Chongqing Youyou Baby Women's and Children's Hospital, becoming the first real estate enterprise to lay out the field of women's and children's medical care.

Earlier, in 2017, Wanda announced the establishment of the Great Health Group. At that time, Wang Jianlin said that Wanda would go to real estate, establish a chain of hospitals, and officially enter the medical industry. At the end of 2020, Chengdu Wanda UPMC International Hospital, which was built with an investment of 6 billion yuan by Wanda Group, announced its capping.

In terms of pension real estate, Vanke and Sino-Ocean have earlier layouts. Around 2009, Vanke launched its own pension real estate plan; In 2012, Sino-Ocean Land launched Chunxuanmao, an international high-quality health care service brand. According to the official website, today, Chunxuan Mao has taken root in 5 core urban agglomerations and 8 cities across the country, and has successfully operated nearly 30 chain institutions.

CR Land has also entered the health care industry since 2016. According to the official website, its business focuses on health care towns, continuous care communities, urban health care complexes, community home service centers, rehabilitation medical and education and training, covering 10 cities in six regions, with a total of 17 projects, 13 in operation, and more than 8,000 beds.

In addition, among the top 10 companies in real estate enterprise sales in 2023, all of them have their own high-end pension industry.

Gemdale, Poly and Sunac are slightly more advanced. These companies have departed from the usual real estate operation ideas of real estate companies and have begun to transform into investment and even other more specialized fields.

In 2021, Gemdale invested RMB 200 million in Suzhou WuXi Huiying Phase I Industrial Investment Fund Partnership (Limited Partnership), which mainly invests in high-quality enterprises in the medical and health field, thus enabling Gemdale to realize its curve investment in the medical industry.

In 2019, Sunac China established that it would cooperate in the construction of the "Sunac Qingdao Medical Center Affiliated to Tsinghua University" in Qingdao West Coast New Area; In 2020, Sunac China made a strategic investment in Johnson Medical, and the two parties will work together to carry out comprehensive cooperation in the field of urban medical facilities and medical and health care. According to the data, Johnson Medical is committed to solving the problem of primary medical care in the new area of strong second-tier cities, complying with the development of national policies and complementing public hospitals, and has now laid out more than 30 medical institutions in Xi'an, Chengdu and Chongqing.

In 2020, Guangdong Poly announced that it would jointly build a health service center and a civil aviation medical express line with Tianjianxing. According to reports, the Civil Aviation Medical Express was established with the consent of the State-owned Assets Supervision and Administration Commission of Guangdong Province and was a pilot project of a state-owned holding enterprise affiliated to the Provincial Airport Group, and it was also the only project that was officially approved by the Guangdong Provincial Health Commission at that time to legally carry out non-120 emergency transport business. The project has completed the institutional transformation from a state-owned holding company to a private holding company, and its business scope includes ambulances, high-speed rail and other land medical evacuation, global aeromedical evacuation, helicopter rescue, and large-scale event medical security.

According to the strategic cooperation agreement signed by Guangdong Poly and Tianjianxing, it plans to open civil aviation medical transport services in more than 10 communities. Owners can experience the comprehensive sea, land and air transfer service of the civil aviation medical express line at their doorstep, as well as the green channel of more than 300 tertiary hospitals across the country, which is also the first community implantation of civil aviation medical transport resources in the country.

Ten years of cross-border, what are the wins and defeats?

In 2014, Shenyin & Wanguo Securities released a research report entitled "The Silver Age of Real Estate: Cross-border Transformation is in the Ascendant - One of the Series of Research on Cross-border Transformation in the Real Estate Industry". According to the report, among the 142 listed real estate companies at that time, 41 real estate companies have been or are in the process of transformation, of which the number of enterprises involved in medical care (including pension) is the largest, reaching 13.

Since 2014, it has been exactly ten years.

Different from the real estate industry with high turnover and high leverage, medical and health care is characterized by large investment, long time and high professionalism, and the difference between the two is obvious. Judging from the results, during this period, many companies have failed to complete the de facto transformation, and some of them have even shown "failure".

The highest failure rate is the one that opened the hospital.

In August 2022, Qingdao Haifa Group announced the official opening of Qingdao Haikang Hospital, located on Xingguang Island, West Coast New Area, Qingdao. It is reported that the predecessor of Qingdao Haikang Hospital is Qingdao Yingci Wanda International Hospital, which Wanda "abandoned" in 2017. Soon after the establishment of the hospital, Wanda fell into a crisis in the capital chain, and was sold to Sunac China and renamed "Xingguang Island International Medical Center".

It is rumored that Xingguang Island Hospital was not put into operation for nearly 3 years after its completion, and it was not until Haifa Group took over that the recruitment process began and opened for operation.

According to media statistics, Wanda Group previously planned to open a total of five international hospitals, and currently only one is Chengdu Wanda Pittsburgh Hospital.

For this kind of phenomenon, some experts have analyzed that in the early years, the policy encouraged private capital to enter the medical field, and the "new medical reform" plan has pointed out that "it is necessary to accelerate the formation of a diversified medical pattern and encourage private capital to set up non-profit hospitals", and it is the right time for real estate enterprises to invest in cross-border medical care. However, due to various factors such as the reform of the medical insurance payment side, the profitability of the hospital declined, and the accounts could not be calculated, so it had to be shut down.

In fact, not to mention real estate companies, even pharmaceutical companies have many difficulties in running a doctor. As early as 2014, Humanwell announced that it would deploy about 20 hospitals in the next 3-5 years. However, since 2018, Humanwell Pharmaceutical has chosen to gradually sell the relevant equity and slowly withdraw from the field of medical services.

In terms of the most tried and "simplest" pension real estate, although there are many that are still in continuous operation, there are very few that are really profitable. In the statements of many real estate companies, the profitability of pension projects is not separately disclosed.

However, the evaluation of Tan Yiliang, chairman of Jiurucheng Group, can be used as a reference. At the 5th Lujiazui Summit of China's pension industry held in 2020, he said in an interview with the media: "Jiurucheng invested 6 billion yuan in 10 years to start making a profit", "If you want to consider making money quickly, pension is not a good business, it is an industry with strong public welfare." ”

In addition, Vanke has been shutting down and canceling related assets for several consecutive years: in 2018, it closed down Beijing Vanke Xingfujia Community Elderly Care Center; In 2019, the Beijing Vanke Jiayuan Community Embedding Center was closed; In 2020, two subsidiaries of "Hangzhou Xiacheng District Suiyuan Home Home Care Service Center" and "Shenyang Wanyi Kangrui Elderly Care Service Co., Ltd." were cancelled.

According to the "Healthy China" strategy, by 2030, the total scale of the mainland's health service industry will reach 16 trillion yuan. More and more real estate companies have begun to play the role of "urban operation", and if medical elements are added to the project, it will produce unique competitiveness, which has also become the confidence of real estate companies to transform.

However, in practice, affected by inertial thinking, many real estate companies not only do not make efforts to transform, but instead regard transformation as a gimmick to support housing prices. According to the analysis of industry insiders, the financing cost of real estate enterprises is usually very high, and the financing cost of non-real estate is lower than that of real estate. However, the internal logic of such a routine is not much different from the "real estate + education = school district housing" in the early years, and it is not a long-term solution.

The industry believes that although the big health industry seems to be a "blue ocean", its internal mechanism is far more complex than that of the real estate industry, and it has not formed a standardized market. If real estate companies want to transform successfully, they must resolutely abandon the idea of high turnover and quick money in the past, take root in the depths, attach importance to sustainable operation capabilities, and be ready to fight a protracted battle.