Greentown’s house building unit plans overseas IPO
Firm builds homes on land acquired by other parties and collects management fees – a vastly different business model to most mainland property companies
Greentown Real Estate Construction & Management Group, the house building unit of Hangzhou-based developer Greentown China Holdings, is seeking an initial public offering overseas in the near future, according to its general manager, Li Jun.
The unit, which builds homes on land acquired by other parties and collects management fees, is the second largest of Greentown’s four subsidiaries in terms of contracted sales, after the group’s development arm.
Its business model is vastly different from the predominant “asset-heavy” model adopted by most mainland property companies, of acquiring land at heavy cost, then designing, building, and selling the completed homes.
Other developers have begun to use this so called “builder” concept as gearing ratios rise, land becomes scarcer, and margins are squeezed.
However, few have set up an independent company, such as Greentown’s.
Li said the firm is fast expanding its business by utilising the advantage of its brand, which is recognised in China as high quality.