China Vanke

Vanke eyes new markets to ride out residential volatility

PUBLISHED : Monday, 18 August, 2014, 9:34am
UPDATED : Friday, 15 July, 2016, 10:32am

China Vanke, the mainland’s biggest developer by sales revenue, said on Sunday that it would continue to focus on the end-user home market, while exploring new business opportunities such as senior living, holiday and logistic properties in a bid to enhance its income sources.

It reported a 5.56 per cent year-on-year increase in net profit in the first six months of the year to 4.81 billion yuan (HK$6.05 billion) because it sold more small and medium-sized homes.

Its debt-to-asset ratio rose to 78.93 per cent from 78 per cent.

Vanke’s sales rose 17 per cent in the first seven months of the year to 114.23 billion yuan. But its sales last month fell 31.3 per cent from June to 13.32 billion yuan despite a cut in average selling price of 12.6 per cent.

The market will see bigger fluctuations in the short term, and companies will see more competition
China Vanke

“The market will see bigger fluctuations in the short term, and companies will see more competition,” Vanke said in the results announcement.

Insurers and developers have yet to find a reliable way to profit from the mainland’s ageing population by providing seniors’ housing and elderly care because mainlanders are not ready to pay for such premium services.

The business potential seems huge. The mainland is expected to be home to more than 300 million people aged 60 and older by 2025, up from 202 million at the end of last year, creating an industry worth trillions of yuan.

But developers, insurers and operators are all struggling to figure out where to build such projects, what kind of services they need to provide and how much they can charge so that the business can attract enough clients and generate sustainable profits.