Developers keen to exploit tourist yuan
Mainland developers are turning to tourism-related commercial projects as safer bets than residential developments, which are bearing the brunt of government measures to curb demand and price growth in the sector.
The trend could see strong growth in property projects integrated with serviced apartments and leisure and entertainment facilities, presently in their infancy on the mainland, according to Zhang Wei, deputy general manager of Zhejiang Tourism Jishi Investment.
The investment arm of state-owned Zhejiang Tourism Group was planning to launch a 2 billion yuan (HK$2.45 billion) fund that would focus on investments in tourism-related property projects, Zhang said.
'Where do families go over weekends apart from shopping at malls and restaurants?' he said. 'We believe property projects offering leisure facilities such as spas, hot springs, and 'wellness' centres will see big growth over the next decade.'
Zhang, who was speaking at an Invest in China, Invest in the Future seminar in Shanghai last week, noted that several such projects were under negotiation in a number of cities, though he added that discussions were in an 'early stage'.
The Zhejiang Tourism Group announced last month that it would team up with Zhejiang's Yiwu municipal government to invest 20 billion yuan in the development of a film studio, luxury hotel, convention and exhibition centre, and serviced apartments in Yiwu.
The proposal is in line with a shift last year as developers turned to commercial property development, on which there are fewer restrictions.
After two years of government of austerity measures to push home prices down to what Beijing regards as a 'reasonable level', some developers have been forced to release new projects at discounts of as much as 30 per cent.
Wang Jun, president of mainland developer Coastal Real Estate Group, said integrated property projects would generate higher profits and more sustainable revenues than purely residential developments.
'Developers with comprehensive plans to build large-scale projects combining residential units with entertainment and commercial elements will stand a better chance of winning sites at government tenders,' Wang said. 'Compared with solely residential projects, such integrated commercial real estate will enhance sites' value and even create job opportunities.'
Wang added that property projects targeting tourists, as well as information technology firms, or industrial parks, could negotiate for lower land prices.
Last week, golf resort operator Mission Hills announced it planned to build a film studio and theme park in Hainan, based on sets featured in the films of mainland director Feng Xiaogang. The HK$6 billion Mission Hills Huayi-Fengxiaogang Movie-themed town is expected to open as early as 2014.
Shenzhen-based Mission Hills will hold a 60 per cent stake in the venture, with mainland film production company Huayi Brothers Media Group holding 30 per cent, and Feng Xiaogang holding 10 per cent.
The year-on-year drop in mainland home sales from January to March. Developers want to exit the sector for commercial ventures