Caixin
Oct 07, 2022 04:42 PM
BUSINESS

Vanke to Consolidate Property Management Units as Development Business Struggles

What’s new: Developer China Vanke Co. Ltd. (000002.SZ) plans to put 49 commercial properties like stores and shopping malls under the control of a subsidiary to streamline its property management business, an executive from the unit told Caixin.

The move comes as Hong Kong-and Shenzhen-listed Vanke moves to expand into areas such as providing services to rental apartments and malls to diversify away from its property development business, where profit margins have shrunk due to tightening regulations.

The reorganization will leave SCPG Holdings Co. Ltd., a property management company that Vanke acquired in 2016, running all of the real estate giant’s commercial properties.

The context: Currently the 49 projects — which cover about 2 million square meters (21.5 million square feet) of floor space — are managed by Vanke’s separate regional branches. SCPG operates more than 100 commercial properties that cover 10 million square meters.

In the first half of 2022, Vanke’s revenue from commercial properties rose 10.4% year-on-year to 4 billion yuan ($562 million), according to its financial statement. Over the first eight months of the year, however, contract sales of the properties it developed fell 36.8% year-on-year as the industry wrestled with a liquidity and confidence crisis.

Related: Distressed Chinese Developers Scramble for a Piece of $28.5 Billion Industry Bailout

Quick Takes are condensed versions of China-related stories for fast news you can use.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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