Bricks and Mortar | Developers in tough luxury segment switching to mass residential

To run a successful business on the mainland, developers must learn to dance in step with government policies.

That is why some luxury home builders are now shifting their product mix towards the mass market, which is favoured by the authorities; others have quit, and the remaining ones will bear the brunt of market scepticism about the prospects for the luxury segment.

Aggressive expansion ill-timed with China's constant property market tightening campaigns in the past decade has killed many developers.

The latest example is the Guang Group, a privately held developer in the third-tier city of Huizhou in Guangdong province.

But the biggest recent shock to the industry is a decision last month by Song Weiping, founder of reputable luxury home builder Greentown China, to sell most of his stake in the firm to its close working partner Sunac China.

Song blasted policymakers for distorting the market to an extent that it was no longer suitable for most players. In a news conference, he said the deal was 30 per cent driven by the deteriorating environment.