Chinese developer Greenland Hong Kong expands into China’s US$1.9 trillion aged care sector as property market slumps
- The diversification aims to help sustain growth as China’s economy slows
- Focus of its senior care business will be in first-tier cities
Mainland property developer Greenland Hong Kong has set its eyes in major Chinese cities to expand its elderly care services as a way to accelerate the company’s diversification into non-property businesses amid China’s real estate market slump.
Hou Guangjun, chief operating officer of the company, told the South China Morning Post that first-tier cities including Beijing, Shanghai, Guangzhou and Shenzhen were targeted as the Hong Kong-listed developer looked to tap the growing demand among the mainland rich for better health care and senior care offerings.
“As we move into health care and elderly care businesses, Greenland Hong Kong is not chasing quick returns,” he said. “This is a segment that we want to develop ourselves into a market leader because we have our own advantages.”
Greenland Hong Kong, a unit of Shanghai’s largest developer Greenland Holdings, is about to start operation of a medical institution in the city with its partners Provectus Care, an Australian elderly care company, and Shanghai International Medical Centre.
The 50-bed medical facility focuses on Alzheimer’s disease, where cases in China are expected to rise rapidly in tandem with the ageing society.
The country’s population of retirees aged over 60 hit 230 million at the end of 2016, accounting for 16.7 per cent of the country’s total, according to official statistics.
China’s elderly service market is likely to top 13 trillion yuan (US$1.92 trillion) by 2030, the Chinese Academy of Social Sciences estimated.
Greenland Hong Kong could expand its aged care service offering to the hundreds of existing property development projects undertaken by its parent company across the nation.
“Elderly care has a huge market potential in China and it has yet to see an established market leader because the industry is still at a rudimentary stage,” said Cao Hua, a partner at private equity firm Unity Asset Management. “Those companies with large network and huge property resources have good opportunities to develop quickly.”
Since 2016, Beijing has imposed a series of austerity measures such as limiting home purchases and higher mortgage loan requirements to cool the real estate sectors, thwarting developers’ core businesses as the Chinese economy slows.
Developers are accelerating the collection of money owed to them by customers and the pace of property sales to maintain a sound cash position, as well as diversification into non-property businesses to sustain earnings growth.
Greenland secured pre-sale agreements worth 37.93 billion yuan with clients through selling unfinished flats in 2018, up 26 per cent from a year earlier, according to a stock exchange filing on Friday.
Its shares edged up 0.5 per cent this year, closing at HK$1.92 (24 US cents) on Friday.