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The development status of a real estate company can often be glimpsed by whether its land acquisition is aggressive and whether the sales of developed projects are tight. However, China Railway Real Estate's aggressive land acquisition and project layout in the Shanghai area have fallen into a contradiction and embarrassment of increasing complaints and rights protection despite the fact that houses are easy to sell.

According to media reports, at the end of May this year, the second batch of centralized land supply in Shanghai began, and major real estate companies participated in land bidding. In the end, China Railway Real Estate defeated nine strong real estate companies such as Zhonghai Development and Greentown to win the bid for Pudong residential land for 1.324 billion yuan.

According to the transfer documents, the plot is planned for residential use, with a transfer area of 12482.25 square meters, a plot ratio of 2.0, a total capacity of 24964.5 square meters, and a starting total price of 1.204 billion yuan. The floor price is 48220 yuan/square meter. It is not difficult to see from the location of the plot and the tens of thousands of square meters of land available for development that this will be another piece of "fat meat" that China Railway Real Estate will acquire.

It should be noted that around two years ago in June 2022, China Railway Real Estate teamed up with China Railway Nord to acquire the 44-15 plot on the north side of the Shanghai Qingping Road in Xihongqiao, Qingpu District. The project opened for the first time in November of that year, triggering a frenzy of buying with a subscription rate exceeding 300%. Moreover, the second and third batches that followed were sold out on the day of opening.

However, this internet celebrity market, China Railway Hongqiao Yidu, jointly created by two state-owned enterprises, has been collectively complained about by property owners due to allegations of standard reduction and configuration reduction, and has even been brought to the forefront of public opinion. This also raises concerns about how China Railway Real Estate, which is aggressively acquiring land, can ensure the quality of project delivery and the rights of consumers while the company develops rapidly?

Shanghai's real estate market has many problems, and China Railway Real Estate is also unable to avoid them

In recent years, the real estate industry has been continuously sluggish due to the impact of external economic environment and industry cycles. At the beginning of 2022, major real estate companies have also raised the banner of "ensuring delivery" to stabilize market sentiment and allow brands to continue to "retain" people's hearts.

However, in the real estate market, the promotional content of developers is far from the actual delivery, and it is even common to see "delivery is right protection". In the Shanghai real estate market, the same applies. For example, on March 15, 2022, the media exposed reports of projects developed by real estate companies such as China Railway Construction and Dajia Real Estate, which were heavily complained about by consumers. These negative news even cast a shadow over the development of the entire Shanghai real estate market.

Therefore, the factors influencing consumer housing decisions have shifted from simply focusing on price and location to focusing on the strength of developers. It is understood that during the period of 315 in 2022, Fenghuang.com Real Estate Shanghai Station launched a "315 Property Quality Survey". The data shows that the top three factors that determine whether consumers will buy a house are price, location, and developer strength. The proportion of respondents who prioritize the three factors is 31%, 21%, and 16%, respectively.

According to observations, this may be attributed to the media's exposure in recent years of many default events such as developers breaking the funding chain, project completion, and delayed delivery, which have brought concerns and anxiety to consumers when buying houses. While market confidence is being undermined, it is particularly important for developers to maintain their brand image and trust.

As the saying goes, the crows in the world are generally black. When there are frequent issues with property delivery, China Railway Real Estate is not immune to it, and even feels like "repeating the same mistakes". For example, China Railway Hongqiao Yidu, which sold 6.594 billion yuan through "three openings and three outflows", was originally a milestone for China Railway Real Estate to expand its territory in Shanghai, but unexpectedly became the target of consumer criticism.

It can be seen from this that under the reputation of China Railway Real Estate, it is actually difficult to match. As a landmark project in Shanghai, it has also shown signs of failure.

Accused of false advertising, the bumpy collective rights protection path of homeowners

On social media such as Xiaohongshu and Tiktok, roast about the poor quality of Yidu public area in Hongqiao, the difference between the publicity picture and the effect picture of the letter from home, and even the posts suspected of false propaganda can be seen everywhere.

For example, in exterior facades that are difficult for homeowners to pay attention to, some observant homeowners have found that although they were informed before the sale that paint is the main method, the actual aluminum content of the exterior facade is extremely low, and the paint has not been applied flat, resulting in uneven marks.

In terms of communication regarding property rights protection, the owners of China Railway Hongqiao Yidu expressed that it was difficult to reach a consensus between the two, and the developer's attitude was somewhat perfunctory.

According to media reports, a homeowner said, "When we bought a 98 square meter apartment, we didn't have a model room. Let's refer to a 120 square meter apartment. The air conditioning vents in the model room were extended outward, but to our surprise, the 98 square meter apartment only protruded 10cm, making it impossible for us to make cabinets. After negotiating with the developer, the other party refused to admit design errors and refused to make improvements. The homeowner also shared screenshots of the community communication group with media reporters."

Some homeowners have also expressed extreme dissatisfaction with the quality level of the public area. For example, some homeowners have expressed that 62000 yuan is the highest unit price in the same area, but the construction standards of our community are far lower than their quality, which creates a huge quality gap with the properties in the same area! At the same price, with the lowest quality price of materials, developers may be earning the highest profit margin.

In addition, the selection of materials and aesthetic issues for greening within the community have also been criticized by homeowners. According to the comparison between the design rendering provided by the owner and the actual photos of the community, it can be seen that the green coverage rate is far lower than the original promotion.

It should be noted that at the beginning of the promotion, China Railway Real Estate used copywriting such as "Forest Dwelling Realm" and "Light Luxury Vacation", and used many "vivid" descriptions of the greening effect, which also made many consumers full of imagination before purchasing a house. However, when homeowners see the actual greening effect, they are somewhat disappointed.

What is even more difficult for some homeowners to accept is that the basic indoor decoration of the property is also somewhat unsatisfactory. For example, some homeowners have reported that the size of the 98 square meter shower room in this property does not match the advertised 120 square meter unit. The 78cm wide shower room is too small to turn around, resulting in the inability to use it normally.

Some homeowners have expressed that the actual construction quality of this price and level of commercial housing can only be compared with the relocated housing. It is understood that such quality issues even appear on the leadership message board of People's Daily Online. And the related complaint content is also similar.

For example, one of the homeowners stated that when they approached to view the property, many neighbors found that the construction materials for the unit hall of the building were rough, the gate structure was simple and perfunctory, and the exterior facade was heavily coated with elastic paint that was uneven and watermarked. There are more than 30 safety hazards in the simple iron railing walls and outdoor garages, such as greenery like vegetable fields, and difficulty turning around in the shower rooms of some residents!

While the property is facing doubts about shoddy workmanship and cutting corners, homeowners are also becoming emotional and constantly upgrading their forms of rights protection. In the end, China Railway Real Estate also had to step forward to coordinate and organize an offline communication meeting with over a hundred people, and as many as hundreds of owners participated online.

However, according to media reports, China Railway Real Estate does not seem to attach much importance to this communication method. For example, the leaders of China Railway Real Estate were half an hour late for an important communication and problem-solving meeting that was considered by the property owners. In response to the objective issues raised by the owners, China Railway Real Estate was also evasive and did not provide a clear solution. Even at the meeting, customer service personnel clashed with the questioned owners, creating a very tense atmosphere.

It can be seen that China Railway Real Estate has not shown sincerity in the feedback of project quality issues from the owners. Many homeowners have expressed their disappointment through social media, even stating that they no longer believe in so-called "central enterprises", and so on. Therefore, China Railway Real Estate has also been accused of "store bullying", and the road for homeowners to protect their rights will be very long.

At the same time, some homeowners have also exposed that when they collectively went to Nanjing Ningchuang Real Estate, owned by China Railway Holdings, to defend their rights due to inadequate community rectification, they were obstructed by Wang XX, who claimed to be the office director, and even physically assaulted others. This is not serving customers, but shamelessly standing on the opposite side of consumers. It is unknown whether Ni Changjian, as the chairman of the company, knew about this matter?

Running all the way in Shanghai, hidden behind the glamour is unbearable

It is not difficult to see from the previous analysis that China Railway Real Estate is very aggressive in acquiring land in Shanghai. Especially as a subsidiary of China Railway Corporation, China Railway Real Estate has made great strides in the residential sector in recent years, and first tier cities represented by Shanghai have also become the main battlefield of China Railway Real Estate.

According to observations, China Railway Real Estate is expanding its territory in Shanghai and is showing rapid momentum. Multiple popular land auctions have revealed the presence of China Railway Real Estate, which has won multiple bids and secured prime locations.

For example, in the first half of 2024, China Railway Real Estate teamed up with Huafa to acquire the Minhang Gumei plot. Previously, China Railway Real Estate also competed for plots such as China Railway Fenghuili, China Railway Hongqiao Yidu, and China Railway Huguang Yijing.

By calculation, China Railway Real Estate has obtained 7 projects in Shanghai. After winning numerous projects in one fell swoop, China Railway Real Estate's sales in Shanghai also performed well. In 2023, China Railway Real Estate entered the 41st place on the Shanghai sales list. However, China Railway Real Estate, which has been rushing all the way, has seen some popular properties sell out immediately upon opening, while others have seen some properties remain unsold and difficult to sell than expected.

As is well known, Xuhui, located in the central area of Shanghai, has always been the golden zone with the most scarce new houses. Previously, there was a frenzy of multiple people competing for a property in Xuhui Changqiao Hongpan Huicheng South Street, Baihuiyuan Phase III, Baoneng Mansion, and Yunjin Dongfang during the opening, with a winning rate of less than 10%.

In particular, Yunjin Oriental, which opened in September 2023, achieved a high qualifying score of 118.32, reaching the highest score since the new housing system in Shanghai. Huiyuanxi and Poly Binjiang Tianjun, also known as the "twin stars" of Xuhui, were liquidated upon entry into the market.

However, China Railway Real Estate's development of China Railway Fenghui has not continued the glory of Xuhui. Although a total of 196 housing units received 210 valid intention subscriptions, the subscription rate barely exceeded 100. However, more than a month after the opening, according to online real estate data, there are still 63 available properties in China Railway Fenghui, with a turnover rate of just over 60%.

Perhaps it can be seen from the fact that China Railway Real Estate's projects are no longer in high demand that China Railway Real Estate does not have much "mass base" in Shanghai's real estate market. What is even more worrying is that over the years, China Railway Real Estate has not gone from being unknown in the past to becoming a household name, but rather various rights protection news is flying everywhere. It is obvious that this is not a good news for a company that has recently ventured into residential commercial housing. Behind China Railway Real Estate's aggressive foray into the market, there are also many hidden flaws.

epilogue

As a real estate enterprise with a background in central enterprises, China Railway Real Estate's aggressive land acquisition strategy has laid the foundation for its rapid development, but it has also planted potential problems in the quality of its projects, causing trouble.

China Railway Real Estate's unsold projects in Shanghai, as well as some high-profile promoted projects, have been frequently defended by consumers due to quality issues, which indicates that China Railway Real Estate may not have won consumer trust in the Shanghai area, and even is consuming its brand trust due to the negative experience some projects have brought to consumers. Therefore, China Railway Real Estate's future expansion into the Shanghai market may not be a smooth path.

I hope that in the fierce market competition, China Railway Real Estate, facing aggressive expansion pressure and market tests, can rely on its capital strength and brand strength to open up a situation in important cities such as Shanghai, and truly win the market with its product strength and brand reputation.