Urban areas are important carriers to promote high-quality development, create a high-quality life, and build a socialist modernized country in an all-round way. By the end of 2024, the urbanization rate of the permanent population in China reached 67%, with 940 million people living in urban areas. As the needs of the people have shifted from "whether there is" to "whether it is good", the construction of cities in China has also shifted from large-scale incremental construction to a focus on improving the quality of existing stock and adjusting the incremental structure, entering an important period of urban renewal.
The implementation of urban renewal actions is an important part of the new urbanization strategy, and urban renewal requires a large amount of financial resources and other elements. In recent years, with the increase in financial and fiscal policies and the continuous innovation of investment and financing mechanisms, urban renewal has accelerated in various places, promoting the high-quality development of urban construction, further stabilizing investment, promoting consumption, benefiting people's livelihoods, and continuously painting a new picture of a happy life in the expansion of domestic demand.
Financing and "integrating wisdom", policy-based finance presses the "accelerator" for the renovation of old residential areas.
Uneven roads, waterlogging during rainy days, and the frequent occupation of sidewalks by cars made travel very inconvenient. Speaking of the living environment in the past, Cai Yunqiu, who has lived in the Fuli community of Xiangdong District, Pingxiang City, Jiangxi Province, for 20 years, shook his head.
"Family members have always urged me to move, but I'm accustomed to the old house and have developed a bond with the neighbors and the community," Cai Yunqiu hesitated, but then good news came about the renovation of the community.
The bumpy road surface was repaired and paved with asphalt, the rain and sewage pipelines were renovated and the drainage is now smoother, and the newly planned parking spaces and activity squares are clearly zoned... The Fuli community, which has been basically renovated, has taken on a new look. "Now we live more steadfastly and our lives are more fulfilling," said Cai Yunqiu, who gathers with neighbors every evening to do fitness exercises in the activity square.
Behind the accelerated "transformation" of Fuli Community, there is an indispensable policy financial support. "Since the beginning of the renovation plan design, the National Development Bank's Jiangxi Branch has been involved and has provided about 10 million yuan in long-term loans," said Yang Qian, the person in charge of the project at the construction and development company of Fuli Community, Pingxiang City Boyue Construction and Development Co., Ltd.
The renovation of old residential areas is a complex, comprehensive project. We assist the construction party in calculating the investment and benefits during the planning stage of the project, to better achieve financial balance. said Shao Tianxia, a customer manager at the Jiangxi branch of the National Development Bank who participated in the renovation of the Fuli residential area. The renovation mainly focuses on basic projects such as road hardening and pipeline transformation, and improvement projects such as parking lot expansion. Once the renovation plan is set, the renovation cost can basically be calculated.
At the same time, it is also necessary to help the construction party plan the source of repayment and provide financing in accordance with the principle of marketization. The renovation of old residential areas has a large one-time investment, but the sources of income are limited and the recovery period is long. How to provide financing plans reasonably to help the construction party achieve a "slight profit and sustainable" renovation model?
First, calculate the "small account". After the renovation of the Fuli community, the environment is clean and beautiful, parking is more orderly, and to maintain the renovation effect, the community implements unified property management according to the requirements of the owners, and the corresponding property fees and parking fees can become the income source of the renovation project.
Let's calculate the "big picture". "From a practical perspective, the renovation of Fuli Community is not isolated, but is part of the continuous renovation of more than 20 old communities in the surrounding area, which can be considered as a whole for benefits," said Shao Tianxia. For example, the construction party has the right to benefit from the operating facilities such as the nearby farmers' market in this area. As the renovation progresses, it will drive the surrounding markets to increase popularity and attract vendors to settle in. "In this way, related operating income gradually increases, and the cash flow for repayment is more guaranteed."
The renovation plan and financing plan were implemented simultaneously, laying a solid foundation for the orderly renovation of 28 old residential areas in this area. "Policy-oriented finance not only provides blood for project construction and financing, but also provides intelligence for renovation, offering a full-process solution," Yang Qian introduced. Now, various projects are advancing in an orderly manner. Once all the renovations are completed, nearly 15,000 households will benefit.
Not only in Jiangxi, but also in Zhejiang, Xinjiang and other places, since this year, many urban and rural old residential area transformation projects supported by the National Development Bank have been steadily advancing. According to statistics, from January to May this year, the National Development Bank issued 575.1 billion yuan of loans related to urban renewal, focusing on supporting the renovation and transformation of urban and rural old residential areas, the renewal and transformation of urban slums, and the protection and inheritance of urban history and culture.
Driving incremental growth with existing assets, new tools in the capital market help create new consumer landmarks.
Malls are a beautiful scene in modern cities, not only becoming architectural landmarks, but also constructing a comprehensive space for consumption, business, and culture. In recent years, new financing tools have injected new impetus for malls to better serve urban life.
In Shanghai's Hongqiao, the construction of new shopping malls is in full swing, with the former Bayi Impression City fully entering the stage of interior fine decoration, having introduced more than 300 domestic and foreign brands and is set to make its debut at the end of the year. On Tianjin's Heping Road Pedestrian Street, old shopping malls have been revitalized, with outdoor, trendy toys, milk tea, new energy vehicles... all new types of shopping are available. The renovated Heping Impression City has attracted more and more young people.
One in Shanghai and the other in Tianjin, the smooth progress of the two projects is inseparable from the West Lake Impression City in Yuhang District, Hangzhou, Zhejiang.
Last year, we issued the CICC Yinhai Consumer REIT with Hangzhou Xixi Impression City as the underlying asset, raising more than 3 billion yuan in funds, most of which were used for the construction and investment of new projects in Shanghai, Tianjin and other places," said Ding Liyi, chairman of Yinhai Group. The launch of consumer infrastructure REITs has allowed the company to find a new business model that can sustain development.
Adjacent to the West Lake Wetland Park, the subway directly connects to the underground first floor of the shopping mall. On weekends, the West Lake Impression City is bustling with customers, with long queues forming at the restaurant doors, and many families shopping at the Sam's Club. "The annual passenger traffic exceeds 20 million, the collection rate of rent exceeds 99%, and the revenue is stable and increasing," said Jia Zhouqi, the co-responsible person of the fixed income group of the investment banking department of CICC. "As the issuer and manager of the CICC Yinli Consumption REIT, our team has conducted multiple on-site investigations and interviews, and we believe that this asset has very good quality."
Jia Zhouqi introduced that infrastructure REITs is a financial tool for financing infrastructure projects by issuing public funds. It can be understood as allowing infrastructure assets to be listed and obtain financing, and investors can trade infrastructure REITs products like buying and selling stocks. Since its launch in 2021, the types of assets covered by this new tool have been expanding, and in March 2023, it was extended to the consumer infrastructure sector. With its good asset quality and clear property rights structure, Inland Group became one of the "first tasters" of the domestic consumer infrastructure REITs project.
Since its establishment, our company has been focusing on shopping center investment, development, and operation and management, with a relatively 'heavy' business model. We really need such a financing tool. For example, the construction of Qianwan Impression City cost more than 2 billion yuan, and it takes a very long time to recover the investment through rent. With this tool, we can revitalize the company's existing assets, not only reduce the company's debt ratio but also invest the raised funds into new investments, making the idle funds "roll".
Consumer infrastructure REITs not only meet the financing needs of enterprises but also bring new opportunities for investors. "Since its listing, CIC-Invista Consumer REIT has completed three distributions, bringing considerable distribution income to investors," said Jia Zhouqi.
"Many of our old customers and tenants have become our investors," said Ding Liye. "This motivates us to continuously update facilities and improve services."
By mid-June, a total of 8 consumer infrastructure REITs had been listed nationwide, involving infrastructure types such as shopping malls, community supermarkets, and farmers' markets. "Consumer infrastructure REITs are connected to both consumption and investment, and they can expand domestic demand by doing both. The future development space is very large," said Jia Zhouqi. He believes that the REITs raise funds for the renovation of existing projects or the investment and construction of new projects. On the one hand, it improves the level of urban infrastructure construction and commercial supporting facilities. On the other hand, it can provide the public with a better consumer environment and investment channels, forming a virtuous cycle of investment and consumption. It is a new practice for finance to improve the quality and efficiency of serving the real economy.
Financial and fiscal coordination, leveraging the delicate craftsmanship of the ancient city to weave a new scene.
In Yangzhou, Jiangsu, the 600-year-old Xiaoqinhuang River has been frequently "updated" since this year.
On both banks of the river, new water-friendly walkways, cruise ship docking stations, and scenic bridges have been added; within the river, sewage pipelines have been relocated, and additional purification equipment has been installed, leading to increasingly clear water; at scenic spots along the river, such as the former site of the second factory of the Qipao paint factory, Qingjing Temple, and Changle Tingtuo, new commercial facilities such as cultural and creative stores and coffee shops have been built on the basis of restoration...
The once neglected Qinhuai River is becoming increasingly bustling, and the surrounding homestay operators, Qin Hongmei and her husband, are the first to taste the sweetness: "The scenery has become more beautiful, the streets and alleys are cleaner, and the number of tourists has increased significantly. Our rooms are in high demand, and we are optimizing our internal structure to increase the number of rooms."
Taking a small-scale, gradual, and micro更新 approach, it's like embroidery work," said Liang Yu Rong, chairman of Yangzhou Ancient City Historical and Cultural Protection and Construction Co., Ltd., describing this urban renewal project that started in 2023. The Xiaoqinhu River is the only urban river left in the ancient city of Yangzhou from the Ming and Qing dynasties, which needs to retain its historical and cultural heritage, restore old buildings as they were, and reactivate the "flavor" of residents' lives, stimulating new consumer vitality. The renovation and renewal is not easy. This project has been in the works for many years, and in recent years, with the support of various policies, the new picture of the ancient city has been rapidly "penned".
We not only invited the team from Southeast University to lead the customization and renovation update plan, but also obtained strong financial support. Liang Yurong introduced that the urban renewal project has a large investment, and the financial funds and financial support cooperate and work together to provide strong support for the implementation of the project.
496 million yuan of special funds for urban and rural construction and development in Jiangsu Province, 34.3 million yuan of demonstration grants for sponge city construction, 120 million yuan of long-term national development bank loans... Various funds form a "组合拳" of support. "What's more surprising is that the new policy has greatly reduced our financing cost," said Liang Yurong. On the basis of the preferential interest rate of the National Development Bank, the Jiangsu Provincial Finance Department also gave a 1 percentage point interest subsidy support.
In 2024, Jiangsu Province introduced a special policy to provide long-term loans for equipment renewal in key areas of urban renewal and the construction and municipal infrastructure sectors (referred to as "Urban New Loan") with financial interest subsidies, under the premise of ensuring that it does not increase the隐性 debt of local governments, to encourage and guide financial and social capital to increase support for the urban renewal sector. As one of the first cooperative banks, the National Development Bank has included 34 cultural and historical protection and inheritance projects, including the Xiaoqinhuang River Protection and Renewal Project, in the "Urban New Loan" financial interest subsidy project database.
"Freezing, changing, demolishing, and supplementing, long-term, stable, and preferential financial support allows us to patiently do the embroidery work. The open-up landscape has already started to gather popularity. In the future, we will continue to use funds where they are needed most to accelerate the economic and social benefits of the renovation and renewal." said Liang Yurong.
