China property

Wanda’s first-half property sales decline 17pc

First evidence of group’s shift towards rental income, within Wang Jianlin’s new “asset-light” business model

PUBLISHED : Tuesday, 05 July, 2016, 7:40pm
UPDATED : Tuesday, 05 July, 2016, 10:59pm

Wanda Group saw its property sales decline 17 per cent in the first half of the year, very much in line with Chairman Wang Jianlin’s announcement in March that sales targets would be cut by almost 40 per cent.

The group’s property arm Dalian Wanda Commercial Properties recorded 50.6 billion yuan of contracted sales from January to June, compared with 61.2 billion yuan the same period in 2015.

June sales dropped sharply to just 14.8 billion yuan, a 28 per cent fall.

On the flipside, rental income in the half year surged 27 per cent year to 8.48 billion yuan.

Wang cut his full-year sales target in March by almost 40 per cent to 100 billion yuan, and said two-thirds of its profit from the sector would be coming from rental income by 2020, amid a serious property oversupply in China’s lower tier cities.

The developer said then it was also shifting to a new “asset-light” business model, with external project investment used to finance land and construction costs, and future net rental income shared with investors.

But many analysts are yet to warm to the new strategy.

“The return on [the company’s chain of] Wanda Plazas is not attractive, on average below 6 per cent, so it’s difficult for Wanda to sell such projects [to investors] at a fair price,” said one property specialist, who asked to remain anonymous.

In the first half, Wanda Commercial has opened eight Wanda Plazas across the mainland, bringing the total number to 142.

Wang, China’s second richest man, is also seeking to privatise his Hong Kong-listed Wanda Commercial, and relist it in the mainland stock market.

Wanda Group made the HK$34.45 billion (HK$52.8 per share) cash-buyout offer at the end of May, and aims to delist its Hong Kong unit in September, after debuting in the city less than two years ago.

Wanda Commercial fell 2.6 per cent in Hong Kong to close at HK$46.5 on Tuesday.

During the half year, Wanda Group said its unaudited revenue increased 10.6 per cent to 119.9 billion yuan. Its Wanda Cultural Industry Group’s revenue increased 57 per cent to 29 billion yuan.