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Chinese property developers embrace 'new normal'

(Xinhua) Updated: 2014-08-09 16:33

Less is more

Credit is tightening and capital flow is limited. Cash-strapped property developers are gradually weaning themselves off over-reliance of financing and avoiding biting off more than they can chew in developing a project.

More and more developers are adopting an "asset-light model," eliminating fixed costs by outsourcing links in property development to other firms.

Leading developer Greenland looks for specialized agents to build houses for its projects, while Vanke runs a program in which its development and management team partners with other enterprises without holding the controlling stake.

"They use their core expertise and brand resource as leverage, which brings higher returns on equity and a bigger market share," explained Liu.

Meanwhile, developers are starting to focus on more niche markets to better serve a middle class that is increasingly sensitive to quality. Properties related to tourism, old-age care, industrial parks and other sectors are flourishing.

To develop new property-related businesses, property developers have to integrate high value-added business branches of other sectors into the real estate industry, Liu said.

"This is the age for online to offline interaction. We should learn from the booming Internet sector - focus and dedication to perfection," he added.

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