China’s cash-rich property developers go rural for opportunities and political currency
Country Garden, Vanke and Evergrande have announced expansion plans in the countryside, which are unlikely to yield quick returns
China’s cash-rich property developers are beginning to sing to Chinese President Xi Jinping’s tune of investing in the country’s vast countryside and agriculture sector.
Not just a far cry from their core property development business, investments in the rural market are unlikely to generate the level of revenue that selling apartments in the urban cities would. They could, however, buy invaluable political currency as Xi has made “reviving China’s countryside” and “poverty alleviation” among his top priorities.
And developers have unabashedly admitted that central government backing – Beijing has pledged to pour billions of yuan annually to develop the countryside – is motivating their interest to expand in the rural areas.
“Government support is a major factor. It is important for private firms to be seen as moving in sync with priority policy,” said Liu Feifan, a property analyst at Guotai Junan International, adding that corporate chiefs’ personal sentiments also played a part as in the case of Country Garden.
Country Garden, the country’s largest developer by sales, announced its foray into the agriculture industry last Friday, with plans to introduce world-class technology and facilities to the industry, especially in areas of farm machinery and seeding.
One of its subsidiaries said it would invest in a research centre backed by Yuan Longping, known in China as “the father of hybrid rice”, which is developing the third-generation hybrid rice.