Theme parks, pension homes and malls: China developers turn to niche projects as cooling measures dim outlook
‘Specialisation’ and ‘niche’ are the new industry buzzwords as property firms seek ways to add value
Amid heightened government controls on the property market and a dimmer outlook for the sector next year, talk of “transition” and “differentiation” has resurfaced among China’s real estate developers.
Discussion about shifting away from homebuilding toward providing property services have dominated every recent industry conference in Beijing and Shanghai, while every developer suddenly seems to have a plan to target niche markets.
The sector is no stranger to the concept of differentiation: when property sales plunged in 2014, many developers announced or accelerated their plans to “diversify”.
China Evergrande Group, for example, took the opportunity to launch its grain, oil, dairy products and bottled water business. Then this September, as its home sales bounced back, surpassing 300 billion yuan on a bull market, it quietly sold off those businesses for 2.7 billion yuan.
“I attended the Bo’ao [Economic] Forum every year,” Yi Xiaodi, chairman of Sunshine 100 Real Estate Group, said at a recent Caixin Summit. “Last year when the market was not good, developers talked up ‘transition’. This year as the market rallied, it was replaced by talks of ‘hitting a sale record of 100 billion yuan’.”
However, this time around the meanings of transition and differentiation have changed.