Wang Zhenhua steers Future Land into one of China’s top 20 developers
Wang Zhenhua founded Future Land Development Holdings in Changzhou, Jiangsu province, in 1993 after working for two state-owned textile businesses for nearly a decade.
The chairman of the Hong Kong-listed developer turned the startup into one of the country’s top 20 developers, with the number of employees soaring from five to more than 3,000.
Wang, 63, was a workshop chief at a textile firm between 1983 and 1988. He then served as a general manager of a textile company at Wutang, in suburban Changzhou, until 1993.
He directed Future Land to become a well-known national-level developer after the company secured its first project in Jiading, Shanghai.
Under Wang’s leadership, Future Land listed a subsidiary on the mainland’s hard-currency B-share market in 2001 via a back-door listing.
Future Land launched an initial public offering in Hong Kong in late 2012.
What’s your plan for boosting the company’s land bank?
Future Land had a land reserve of 14 million square metres at the end of this year’s first half. Our new strategy is to significantly increase investments in commercial property over the next three years. Future Land aims to buy an additional eight to 10 sites each year and our ultimate goal is to have a combined 80 commercial properties in 2020 – either in operation or under construction.
What’s Future Land's sales target for the next three years?
Total sales of Future Land are expected to top 50 billion yuan in 2017 and we hope the company can maintain its position as one of the country’s top 20 real estate developers.
Which areas will Future Land target as it expands into commercial property sector?
The group has developed more than 10 mixed-use projects under the brand of Injoy in 10 cities including Shanghai, Changzhou, Zhenjiang, Suzhou, Changsha, Nanchang, Changchun and Anqing. Most of the projects have become new landmarks in those cities. Under our expansion plan, Shanghai is at the centre and we will mainly target the Yangtze River Delta before extending our reaches to the Pearl River Delta, pan-Bohai Rim and the western part of the country.
Could you elaborate on Future Land’s criteria for picking locations for your commercial property projects?
The so-called sub-centres of the second-tier cities, where the population exceeds 300,000, will be our target locations if a big shopping mall hasn’t already been set up there. We will also pay close attention to those third- and fourth-tier cities where residents’ per capita disposable income is at the nation’s highest level.
How do you assess the impact on malls from China’s rising e-commerce sector?
It is obvious that e-commerce has been increasingly challenging the shopping centres and the trend is irreversible. Our solution is to reduce the retail space at our projects while earmarking more space for entertainment. Previously, retail space accounted for nearly half of a shopping mall. We will lower the percentage to about 34 per cent while space for entertainment activities now represents 33 per cent We believe customers will want to visit fun-filled shopping malls.
How will you compete in the commercial property sector, especially when giants such as Dalian Wanda and Shanghai Greenland are aggressively expanding into the sector?
Competition in the first- and second-tier cities has been cut-throat since are many projects that either have been completed or are under construction. We definitely will avoid taking on those giant developers directly. Indeed, the country’s urbanisation drive creates tremendous opportunities for us. The lower-tier cities without a large shopping mall present untapped opportunities. For example, Zhangjiagang, a fourth-tier city in Jiangsu province, has a gross domestic product of 200 billion yuan and it has a huge demand for high-quality shopping malls.
What’s your take on the residential property market outlook?
The industry has seen a complete break with the past. To be precise, the golden era for developers has ended but it doesn’t necessarily mean that the industry has lost its lustre. Developers can chase stable returns for at least another three decades based on the balance between supply and demand. The industry is in a period of correction now and we believe that last year was just the beginning of the correction and it might get even worse in 2015. Taking a long view, annual housing demand will be no less than 800 million square metres over the next 30 years. It will be a huge market for developers to tap.
How much do you think the recent interest rate cut can help bolster the weak property market?
It’s only a little help. For a homebuyer, the interest rate cut could help them save several hundred yuan in interest per month, but that is just a small portion of a home purchase. For developers, it is believed that the rate cut could lower their funding costs. However, only the top 100 developers in China are able to secure bank loans. Therefore, the interest rate reduction made no difference to the small players.