There’s an interesting piece in the FT on the response of Dalian Wanda Group to the downturn in the Chinese real estate market. Two points jumped out to me.
- It suggests that the main centres of oversupply are third and fourth tier cities and the residential and office sectors specifically. Whilst they’re expecting a 39% drop in sales revenue, the effects of the downturn seem to be variable. Last month, Shenzhen’s house prices rose 57 per cent year on year.
- The company is moving into property management and development management (executing developments on behalf of third parties). It was restricting its activity in such cities to “asset-light investment properties” — it will not own the land or real-estate assets, but merely develop and manage the projects on behalf of third-party investors. I like the phrase “asset-light”.