Greentown China Holdings to launch “4s stores for homes”
Developer to set up China’s first full housing services shop in Hanghzou or Shanghai in June
Hangzhou-based developer Greentown China Holdings plan to establish a housing services company that specialises in repair work and renovation, on the lines of the 4s stores for cars, to tap into China’s fast-growing existing homes market.
With the Chinese government introducing the toughest-ever measures to curb speculation in new home purchases, primary home sales for the whole country may fall to about 7 trillion yuan (US$101.6 billion) to 8 trillion yuan from 10 trillion yuan last year and decline further to about 5 trillion in the next three years, Cao Zhounan, the chief executive officer of Greentown China, told the South China Morning Post.
“Existing home market will become the main battlefield in China in the future,” he said.
The developer, which is known for its high quality luxury property products, is planning to announce its very first full housing services shop in Hangzhou or Shanghai, in June, and then expand to other cities.
“Home purchase is an one-off consumption, but the need for maintenance and renovation could last for dozens of years,” said Li Jun, general manager of Greentown Real Estate Construction & Management Group, a unit of Greentown China.
Different from traditional property management firms which only offer basic securities, cleaning and maintenance services, Cao said Greentown’s “4s store” will provide a complete solution in home maintenance, repair, replacement and renovation services for clients after the delivery of houses which he believes would be the first of its kind in the mainland.
The developer saw its net profit rise 136 per cent to 1.9 billion yuan in 2016, compared to a 60 per cent decline in 2015, thanks to better gross margins.
Its total contracted sales reached 113.9 billion yuan, representing a 58.4 per cent year-on-year growth, exceeding the “100 billion yuan” level for the first time.
Meanwhile, Greentown last year divided itself into five segments to achieve a clearer management structure and business system, including Greentown Real Estate, Greentown Project Management, Greentown Asset Management, Greentown Town Development and Greentown Living Services.
Through the reorganisation, the group now aims to transform from a homebuilder to an “integrated service provider for ideal lifestyle”.
Sales scale is impossible to eternally expand, Cao said, as China’s housing market is becoming saturated and entering into a policy tightening cycle. Hence it is “very risky” to buy any overpriced land for expansion at this moment, he said.
For the industry, the way out is to improve cost-effectiveness and provide added-value services to create diversified profit resources.
Cao said he hoped non-core business, such as agent construction, small town development and home renovation, to contribute two-thirds of the total revenue in the longer term.
For its core property development business, he expects contracted sales to reach about 150 billion yuan by 2020, with pre-tax profit margin ratio maintaining at least 7 per cent.