Sunac China rakes in 10 billion yuan in a single day

Author | Cao Anxun

Editor | Zhou Zhiyu

Recently, there has been a different atmosphere in the real estate market. On one hand, there is the achievement of nearly 20 billion yuan in a single day for luxury homes in Shanghai by China Overseas, and on the other hand, Sunac's luxury homes are hot on the market.

On April 21st, the second phase of Sunac's Bund No.1 Courtyard opened for sale, achieving a sales volume of 9.997 billion yuan on the same day, with a 100% turnover rate, making it the second highest-selling project in Shanghai this year.

During the pre-sale period, the project had already set a new record for luxury home subscriptions and pre-sale ratios in Shanghai, reaching a total subscription amount of 50 million yuan.

According to Sunac, the first phase of the project includes Sky Mansion with a building area of approximately 255-380 square meters, and Star Picking Mansion with a building area of approximately 533 square meters.

Yiju's CEO Ding Zuyu also visited the project and found the average price of 168,000 yuan per square meter to be very cost-effective.

"Today, the land value on the Bund has far exceeded 150,000 yuan per square meter, with surrounding second-hand housing prices easily standing at over 200,000 yuan," Ding Zuyu said.

In addition, Ding Zuyu mentioned that the project has a room acquisition rate of over 80%, main areas of over 200 square meters, and impeccable functional design.

As a key project in Shanghai's Huangpu District and a representative work of Sunac, this project not only injects a shot in the arm into the luxury housing market in Shanghai but also serves as a major weapon for Sunac to boost sales.

The hot pre-sale of the second phase of Bund No.1 Courtyard has also opened up a way for troubled real estate companies to rescue themselves, starting from the project level, introducing strategic investments to revive projects and improve operations.

The second phase of Bund No.1 Courtyard is part of the Dongjiadu project in Shanghai, which was once suspended after Sunac faced a liquidity crisis. It wasn't until the end of 2022 that Sunac brought in a consortium of China Huarong, six banks, and CITIC Trust, reaching a financing cooperation agreement, injecting 12 billion yuan into the project, allowing it to restart.

According to Sunac's announcement, the second phase of Bund No.1 Courtyard project is jointly developed by China Huarong Financial Assets and CITIC Trust, along with Sunac.

Despite the setback, there are still multiple high-quality luxury housing projects attracting strategic investments, restoring their blood-making ability, which is a silver lining for Sunac amidst its misfortune.

Sunac also pointed out in its annual report that nearly a trillion yuan of new supply will be added in 2024, with over 85% distributed in core cities of the first and second tiers. This includes new projects in Dongjiadu and Huangpu Yalong in Shanghai, as well as the upcoming launch of Sunac No.1 Courtyard in Beijing and Future Financial City in Shanghai.

As a troubled real estate company, Sunac is still able to gain the trust of homebuyers, institutions, investors, and creditors. It is fortunate that its project sales and debt restructuring are progressing well, making it one of the few troubled real estate companies to have completed debt restructuring.

However, in order to not disappoint investors and creditors, achieve long-term stable development, and repay debts as scheduled, Sunac needs to find new ways for real estate development in the post-sales boom phase.

CITIC Securities pointed out that the main logic of the real estate sector has changed, and in the future, real estate companies with operational and service capabilities in real estate are the most sustainable and promising.

Entering the period of fruition, the cultural tourism business or Sunac's increased focus on real estate operations will be crucial The financial report shows that Sunac's operating income from cultural tourism projects in 2023 reached 5.91 billion yuan, a year-on-year increase of 29.9%. The management profit turned losses into gains, increasing by 1.57 billion yuan year-on-year, attracting over 150 million visitors. Both revenue and profit have reached historical highs.

However, the development business, as the main source of Sunac's current performance income, still faces the pains of transformation. Sunac urgently needs to maintain the basic stability of its development business in a weakly recovering market environment and to maintain good financing channels.

By completing domestic and foreign debt restructuring and preserving the basic operations of the distressed real estate enterprises, Sunac is expected to lead the way in the recovery of distressed real estate enterprises. Its pioneering experience in exploring the future will also inspire other distressed real estate enterprises. Sunac also needs to find a reliable path to survive the crisis and move forward, joining other real estate enterprises in exploring the second half of the real estate market