Date
24 March 2017
Property developers in China have been trying to integrate various aspects of the traditional real estate business with the internet. Photo: Bloomberg
Property developers in China have been trying to integrate various aspects of the traditional real estate business with the internet. Photo: Bloomberg

How property developers can make the most of the internet

“Internet plus” is fast becoming a buzzword in China since Premier Li Keqiang identified it as one of the country’s strategies in developing the economy.

But what is “internet plus”?

Generally speaking, the strategy is about how China should focus on internet-powered startups, and how new technology can be applied to traditional sectors.

Traditional asset-heavy industries are trying to figure out how to apply the latest internet technology to their businesses. Property developers, for example, want to tap internet technology to sell homes.

Du Jinsong, a real estate analyst at Credit Suisse, told the Hong Kong Economic Journal that applying internet technology to the property industry is not just about gimmickry; the internet can actually help the business achieve higher valuation.

Lee Wee-liat, the head of real estate research for Asia Pacific at BNP Paribas, said the internet will become one of the profit sources for property developers.

Through the process of trial and error, developers have been trying to integrate various aspects of the traditional real estate business with the internet.

Earlier this month, Dalian Wanda Group, China’s largest commercial developer by sales, started tapping the internet to crowdfund capital for building Wanda Plazas. The project is called “Stable Earner No. 1”.

Those who invest in the project can expect to earn an annualized return of 12 percent, which mainly comes from future rentals.

The crowdfunding project received enthusiastic response from the public: Wanda has reportedly attracted 5 billion yuan (US$800 million) in just three days.

Through this project, investors find a channel to earn higher yield while Wanda’s pressure on capital eases as a result. It looks like a win-win situation.

Property management is another area where the internet can boost developers’ core business.

Several developers have launched apps for their real estate projects. Through these apps, residents can enjoy the courier or financial services provided by the developers.

Fusing internet with property development is still in its infant stage. Lee stressed that ecosystem is important in the internet market, but this is what many property developers have neglected so far.

They have launched individual apps for each real estate project. However, such an approach limits the number of users and potential clients.

In order to better utilize resources, Lee suggested that middle-sized developers should work with giant tech firms in developing their online platforms.

He cited China South City Holdings (01668.HK) and Dalian Wanda Commercial Properties (03699.HK) as examples.

China South City has sold a stake to Tencent (00700.HK) while Dalian Wanda has teamed up with Baidu and Tencent in developing its e-commerce business.

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BT/CG

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