For urban investment companies, compared with other projects invested by them, cemetery projects not only have small investment scale, abundant and stable cash flow, but more importantly, urban investment companies can also provide support for cemetery projects through capital channels such as special bonds.
Author: Du Tao, Luo Xueli
Cover: Graphic Creativity
Introduction
I | | In recent years, the policy of "more underground distribution" has clearly proposed to improve the planning of funeral facilities, increase investment and policy support, so as to make up for the shortcomings of public service capacity for funeral, and ensure that the needs of urban and rural residents for "security after death" are covered.
II | | From the perspective of income, the cemetery project invested by the urban investment company can not only bring considerable investment returns, but also have significant social, ecological and other economic benefits.
In recent years, multiple urban investment companies have invested in cemetery construction.
The economic observation network found that since 2020, many county and city urban investment companies under the jurisdiction of Jiangxi, Hunan, Inner Mongolia and other provinces have invested funds to start the construction of cemetery projects.
On May 21, a government investment and financing person who once operated the cemetery project told Economic Observer Network: "In recent years, the trend of local urban investment companies investing in or holding cemetery assets is on the rise, one of the important reasons is that the government promotes the reform of funeral integration. At present, many local governments are encouraging cremation and canceling burial, which requires the construction of public welfare cemeteries."
The urbanization and aging of the population has promoted the continuous growth of the demand for funeral land. As the undertaker of urban infrastructure construction, one of its responsibilities is to provide and improve public service facilities. As a special public service facility, cemetery facilities are increasingly inadequate. Under this background, local governments and urban investment companies have entered the Bureau to invest in cemetery projects.
The feasibility study report of a funeral service facility construction project obtained from the Economic Observer Network lists the income sources of the project in detail, mainly including: tomb sales, tomb management fees, basic funeral service fees, funeral extension service fees and parking space income. Among them, the tomb site management fee is priced as the management fee for the 20 year service life of the tomb site, which is collected at a time when the tomb site is sold. It is estimated that the project can obtain millions of yuan of income at a time, and tens of millions of yuan of income from the sale of tomb sites.
The reporter learned that compared with other projects invested by urban investment companies, cemetery projects not only have small investment scale, abundant and stable cash flow, but more importantly, urban investment companies can also provide support for cemetery projects through capital channels such as special bonds.
A financial institution said: "The cash flow of the cemetery project invested by the local government is very good. It basically does not need to rely on the non-standard financing method with high interest rates in the past. The main expenditure is limited to a part of the construction costs. From the perspective of project operation, the cemetery project is basically an investment option with no loss."
Policy driven
Cemeteries are generally divided into public welfare and profit-making ones, and those invested by local governments or urban investment companies are generally public welfare cemeteries.
Taking Yiyang City, Hunan Province as an example, Yiyang Urban Public Welfare Cemetery will be invested, constructed and operated by Yiyang Urban Construction Investment and Operation Group Co., Ltd. in 2023. Similarly, in Anyuan County, Jiangxi Province, Anyuan Urban Investment Group registered and established a wholly-owned subsidiary, Anyuan Furui Cemetery Project Management Services Co., Ltd. in 2019. Among them, Anyuan Anshun Park public welfare cemetery in Anyuan County is charged according to the government guidance price to ensure that the public welfare attribute is fully covered by the society.
The above government investment and financing personnel believe that the cemetery project invested by the urban investment company is mainly based on two reasons: first, the cemetery project belongs to the scope of government responsibility, and as an urban investment company, it must complete the task of public service construction; Secondly, from an economic perspective, the cemetery project has considerable return potential. By investing in the construction and operation of cemetery projects, urban investment companies can not only achieve economic benefits, but also expand their own asset scale.
The accelerating trend of population aging is regarded as one of the key factors for local governments to strengthen the construction of cemeteries. The Research Report on the Development Potential Forecast and Investment Strategy of China's Cemetery and Cemetery Industry from 2024-2030 released by the China Economic Industry Research Institute pointed out that with the steady growth of the domestic death population, the demand for funeral services continues to increase, and the market scale of the domestic funeral service industry continues to expand, rapidly growing from 169.5 billion yuan in 2015 to 310.2 billion yuan in 2022, with a compound annual growth rate of 9.02%.
Funeral services are generally composed of cemetery services, funeral services and other services. Based on the traditional Chinese idea of "settling down for safety", cemetery services account for the highest proportion among the three business segments, accounting for nearly 50% of the total.
In addition, the investment in the graveyard project of urban investment company has also been influenced by the policy drive. In recent years, the policy of "more underground development" has clearly proposed to improve the planning of funeral facilities, increase investment and policy support, so as to make up for the weakness of public service capacity for funeral and interment, and ensure that the needs of urban and rural residents for "peace after death" are covered.
On June 18, 2021, at the special press conference of the "Fourteenth Five Year Plan" for the Development of Civil Affairs held by the Ministry of Civil Affairs, Zhang Zhende, the then deputy director of the Department of Social Affairs of the Ministry of Civil Affairs, said that there was a shortage of public welfare burial facilities in urban areas, and most urban areas above the county level did not have public welfare cemeteries. The construction and operation and maintenance of public welfare burial facilities in rural areas are lack of institutional guarantee, and the problem of scattered burial and random burial is serious in some places. There are currently 1532 operational cemeteries, with an average of less than 1 in each county or city. Due to the impact of urban planning, land supply, and the "neighborhood" effect, the lack of funeral facilities has become increasingly prominent. During the "14th Five Year Plan" period, in order to effectively guarantee the people's demand for "peace after death", it is urgent for the government to take the lead, improve the planning of funeral facilities, increase investment and policy support, complement the weak points, and realize the public service capacity of funeral to cover urban and rural residents.
On January 8, 2024, Wang Jinhua, Director of the Department of Social Affairs of the Ministry of Civil Affairs, published an article in the China Social Daily, pointing out that the construction of public welfare funeral facilities should be accelerated, and the construction land for public welfare funeral service facilities should be included in the land space planning. Cremation areas should achieve full coverage of funeral homes in county-level administrative regions, and gradually achieve the coverage of public welfare funeral facilities for all urban and rural residents.
In fact, local urban investment companies are also increasing investment and construction in the cemetery industry.
Taking the Urban Investment Company of Urad Houqi, Inner Mongolia Autonomous Region as an example, on March 20, 2023, the new funeral home and cinerary hall project of the company officially started. With a total construction area of 5655.2 square meters, the project will provide one-stop funeral services. In Fujian Province, Fuding Urban Construction Investment Co., Ltd. is also promoting the construction of digital management platform for urban public welfare cemeteries. Public data shows that the project application was approved in February 2024, and the construction content covers "Internet+Funeral Service", funeral business management system, funeral supervision system and other parts. The estimated investment of the project is 3.1775 million yuan, including 2.9687 million yuan for construction and installation. The construction funds will be raised through special bonds.
Project benefits
According to the reporter, when urban investment companies invest in cemeteries, they mainly adopt two modes: one is government direct investment, which is generally the mode that local governments solve the capital needs of cemetery projects by applying for funds within the central budget or issuing special bonds; The other is to introduce social capital. Local urban investment companies or local state-owned enterprises adopt market-oriented financing methods, such as bank loans, or introduce social capital through equity cooperation to raise funds.
From the perspective of income, the cemetery project invested by urban investment company can not only bring considerable investment return, but also have significant social benefits, ecological benefits and other economic benefits.
The feasibility study report on the construction project of funeral service facilities in a certain place obtained by the reporter shows that the expected total income of this cemetery project will reach tens of millions of yuan. Among them, the maximum cost of the project mainly includes the tombstone cost and financing interest. The total cost is estimated to be between 10 million yuan and 20 million yuan, with relatively strong profitability.
The report further pointed out that increasing the investment and construction of the cemetery industry, in addition to economic benefits, has obvious social benefits, which is conducive to changing customs, civilized funeral, and rural revitalization; It is conducive to improving people's livelihood services and social governance. The construction of cemeteries can drive the development of building materials sales industry, construction industry, transportation industry and other related industries, and can provide a large number of construction workers. At the same time, it will drive the development of catering industry, funeral services and other supporting services.
The above-mentioned government investors and financiers believe that "from the current policy trend, the construction of the cemetery industry will be more and more."
Editor in charge: Zhang Di
