Developer Xinming China to build first Kids-Focused property flagship
Hangzhou-based developer Xinming China just went public in Hong Kong in July, and now it is aiming to build itself into the first children-oriented company listed in the city.
China’s commercial property market has reached the ceiling where oversupply has shrunk profit margins significantly and forced developers to find a new niche in segmented markets, such as kids. A new baby boom propped up by the loosened one-child policy is estimated to generate market demand of 4 trillion yuan.
“Indeed, the theme of kids has been frequently used in different industries in recent years, but so far I haven’t seen a successful scaled-up model that covers maternity, babies, and kids who are below the age of 14 in all fields including clothing, food, entertainment, and education,” said Chen Chengshou, Xinming’s chairman.
A survey of 12 major cities conducted by China Index Academy shows that children-focused businesses account for around 17 percent of mainland Chinese commercial areas in 2015, increasing almost eight times from 2011. In addition, approximately 30 to 50 percent of Chinese family spending is related to children.
Xinming China plans to build up its child-centric brand -- Chinese Bambino – around real estate in four different areas including a development fund, trade fairs and exhibitions, e-commerce, and cultural events, which starts with two branded commercial property projects.
One is Chinese Bambino in Shanghai that is scheduled to be completed by the end of this year. Covering a gross floor area of 190,000 square meters, it will serve as an industry incubator of business that is related to mothers and kids. The other is Chinese Bambino in Hangzhou, a shopping mall slated for completion by the end of 2016.
“We are eyeing the first-tier and second-tier cities for further expansion. In the future, the kids-related business will occupy half of the company’s portfolio,” Chen said, adding that around 1 billion yuan would likely be solely invested in the business annually.
The company’s net profit plunged 63 per cent annually in the first half of this year to 83.6 million yuan, which was primarily due to high land prices which squeezed out property profitability, it said.