Chairman sees demand for nursing homes, education and healthcare rising
The era of overall shortage has ended in China's property market, but new issues of unbalanced allocation and undeveloped services have emerged, said China Vanke Co's Chairman Yu Liang.
Yu made the comments at a news conference on Tuesday in Shenzhen, a day after the company announced its annual results. Following the announcement, the company's shares rose 4.85 percent and closed at 31.02 yuan ($4.95) on Tuesday at the Shenzhen Stock Exchange.
The company statement said net profit jumped about 33.4 percent to 28.05 billion yuan in 2017, while revenue reached 242.9 billion yuan. In addition, its sales value of homes rose 45.3 percent to nearly 5150 billion yuan, making it one of the top three developers in China by sales value.
Country Garden Holdings Co Ltd and China Evergrande Group recorded 78 percent and 34 percent growth in homes sales value respectively last year.
Yan Yuejin, research director at E-house China R&D Institute, said the trading growth in China's property market will continue to surge, but he admitted that profits could be reduced.
Vanke's Yu said "the time of unilateral rapid increases in home prices has ended. If developers still buy land, no matter what the price is, it will be a payback time."
In the past 20 years, the unprecedented large scale of urbanization has led to a housing shortage and booming demand, but he said it has ended, citing the fact that the ratio between the number of families and housing units in China has just passed 1. Growth is expected to slow after each family owns more than 1.1 units of housing, which is the case in many developed countries.
However, despite the new market conditions, some residential, office and hotel properties remain vacant, while many young people in cities don't have decent places to live. Moreover, the services related to real estate projects, such as education, healthcare and nursing homes for the elderly, are still in short supply.
Yu said the market size of these services will exceed that of the property industry in the future. Since last year, Vanke has been enhancing its property management, apartment leasing, warehousing, tourism and education businesses.
So far, its new interests include 150,000 rental homes, 10 schools and 62 warehouses.
Xu Jiayin, chairman of Evergrande Group, also revealed the concept of "new Evergrande" at the annual result announcement meeting in Hong Kong on Monday. He said the company will "actively explore" the high-tech, cultural tourism and health industries.