According to DTZ's monitoring data, in the second quarter of 2012, the rent of Grade A office buildings in the Financial Street business district has reached RMB 320.45 per square meter per month. Behind the expensive rent is a serious oversupply situation. According to the data released by CBRE, by the fourth quarter of 2011, the overall vacancy rate of Beijing's Financial Street main neighborhood market was 0.6%, with almost no spare space available. With the rapid growth of the domestic financial industry, new financial institutions continue to generate demand for office space, while existing financial institutions also have the need to enhance their image, making Financial Street the first choice for such demand.
In the summer of 2012, there was news of an expansion of Beijing's Financial Street. It is understood that the Financial Street expansion plan will be finalized in November after the Beijing Urban Planning Amendment Program is introduced. Immediately after the news of the expansion, 20 to 30 financial institutions initially booked office buildings with a floor area of more than 2 million square meters, including the China Merchants Bank head office, the China Construction Bank head office, the Bank of China head office, represented by the Bank of Kunlun, PetroChina's financial sector, and so on.
It is reported that the expanded Financial Street based on the current 2.59 square kilometers of the core area, north to Ping'anli West Street, south to Guang'anmennei Street, east to Xisi North Street, Xuanwumennei Street, west to the north and south of the Lishi Road, Xibianmenwai Street area, the expanded financial center of the district has a total area of about 8 square kilometers. It is estimated that construction of these expanded areas will begin as early as the second half of 2012 and as late as 2015. When this new map is realized in the future, the area of Beijing's Financial Street will surpass Shanghai's Lujiazui's 6.8 square kilometers, becoming truly China's largest financial institutions gathering area.
The new expansion projects on Financial Street are expected to add about 6 million square meters of new buildings. And two-thirds of this may be developed by Financial Street Holding Co. This is a strong support for the steady development of Financial Street Holdings in the next five years.
Meanwhile, the successful operation of a number of large business complex projects by Financial Street Holdings in Tianjin, Chongqing and other places also provides a prerequisite for it to become an untouchable leader in business real estate.
As a state-controlled enterprise with a unique competitive advantage of "urban operation and regional development", Financial Street Holdings had an asset scale of nearly 60 billion yuan by the end of 2011, with a cumulative development area of more than 10 million square meters.
"Through the successful development and operation of Beijing Financial Street, Financial Street Holdings has formed a unique development model, which emphasizes both real estate development and industry building: with real estate development as the platform and urban area planning and industry development as the core; it enhances the quality of the city and promotes the city's economic development and cultural prosperity." Wang Zhigang, deputy general manager of Financial Street Holdings, said.
Wang Zhigang said, Financial Street Holdings is investing in the development of a cumulative total of more than 10 million square meters of projects in Chongqing, Tianjin, Huizhou, business real estate more than 70%. And the industrial parks successfully operated and under construction include Beijing Financial Street, Beijing Desheng Publishing and Creative Industry Zone, Beijing Tongzhou Business Park, Beijing Guang'an Design and Creative Industry Park, Chongqing Guanyinqiao Business District, Chongqing Jiangbei Mouth Business District, Tianjin Financial City and Huizhou Xunliao Bay. "The company believes that driven by factors such as economic restructuring and upgrading of urban functions, the demand for business real estate in key cities will remain on the rise, and business real estate development and holdings face better development opportunities." Financial Street Holdings sources said.
The main business model of Financial Street Holdings is to take business real estate as the leading business real estate, appropriately hold high-quality properties, supplemented by fast-selling products. Identify the market positioning, to provide differentiated products to meet the needs of different markets; in the residential market is not stable stage, business real estate can still maintain a higher and smoother growth rate, to ensure that the company's overall revenue and profitability, at the same time, self-holding properties also provide some of the company's more stable cash flow.
In the first half of 2012, Financial Street Holdings, in conjunction with changes in the internal and external environments, studied and optimized the allocation of resources, highlighting the strengthening of the characteristics of business real estate and the regional strategy centered on Beijing, to promote the company to take the connotative, value-based development path. The company supplemented its business real estate resources and added new projects in Tianjin Financial City; at the same time, it studied the major development opportunities brought about by the construction of a national financial center in Beijing and the expansion of Financial Street, in order to strengthen the impact of its business real estate brand and competitive advantages.
Financial Street Holdings will continue to deepen its research on the business model of self-holding properties. It will optimize the business structure of its self-holding business by adding Xidan Meisheng Commercial; innovate the business model of its self-holding business, conduct in-depth research and practice the asset management and operation mode of office and commercial projects, and continue to enhance the scale of management and profitability of its self-holding business.
According to the data disclosed in the 2012 semi-annual report of the Company, during the reporting period, the properties held and operated by the Company included The Ritz-Carlton, Beijing, Beijing Financial Street Apartments, Financier's Club, Sheraton Huizhou Hotel, St. Regis Hotel in Tianjin, with a total gross floor area of 3,000 square meters. Regency Hotel, with a total gross floor area of approximately 207,000 square meters. During the reporting period, the Company's above-mentioned properties*** realized an operating income of approximately RMB197 million, representing a year-on-year increase of 23.10%.
The Company holds rental properties such as Beijing Financial Street Center, part of the properties of Beijing Desheng International Center, part of the properties of Tianjin World Financial Center, Beijing Financial Street Shopping Center (Phase I and II), Beijing Meisheng International Plaza, Beijing Financial Street C3 Courtyard, Beijing Jinshuijie Catering and scattered office buildings and car parking spaces in the Financial Street area of Beijing, with an aggregate gross floor area of approximately 472,000 sq.m. of which approximately 24.0 million square meters for office buildings, approximately 211,000 square meters for commercial and catering, and approximately 31,000 square meters for scattered parking spaces and ancillary areas in the Beijing Financial Street area. During the reporting period, the Company's rental properties together realized operating income of approximately RMB279 million, representing a year-on-year increase of 19.99%.
In terms of residential sales, the Company stepped up its sales efforts and endeavored to achieve the targets of sales signing and repayment. In the face of the decline in the overall volume of residential sales, the Company adhered to the customer demand-oriented approach and accelerated the sales of residential and commercial products by optimizing the structure of residential products, upgrading the technological content of the products and implementing differentiated sales strategies.
For example, the key projects currently under development by the Company - the opening of the Ronghui project in Beijing's Tiangongyuan site is imminent, with a high degree of market concern; the Century Center, a mixed-use site in Tianjin's Nankai District, which has just been opened, has become a new frontrunner in Tianjin's residential market with its scarcity of garden houses; and the Rongjing City project, which is located in the core of Chongqing's North Coast, is Chongqing's "centralized city", and is the first project of the "centralized city" of Chongqing. The Rongjing City project in the core of Chongqing Beibin is the largest urban complex project in Chongqing's "first economic zone of the Central Business District", with a volume of nearly 1.7 million square meters, encompassing multiple functions such as residential, leisure, shopping, education, business support, art exhibitions, etc., and has become a new benchmark for international life in Chongqing's urban core.
In terms of finance, the Company ensures financial stability and cash flow security. It actively broadens financing channels and finances funds in a variety of ways to meet the needs of the company's operation and development, and maintains the safety of the company's cash flow.