Property developers diversify into other industries

 

It's been over a year since the government carried out tightening measures on the country's property market. And while home prices have been capped in some areas, property developers have also taken a hit. Some are now diversifying into other industries to recoup their profits.

China's real estate companies used to be the most profitable ones in the country. But now, they're going through a tough time.

The latest half-year report on property companies shows that out of 170 companies listed on the Shanghai and Shenzhen stock markets, only 40 percent saw growth in both revenue and profit. Some smaller property companies are now turning to other industries, like coal mining, tourism and film making, to make up for losses incurred in the property sector.

Ding Lei, Chairman of Shanghai Zhangjiang Hi-tech Group said, "Our company is now making a transformation from entirely relying on property investment to expanding shares in science and financial investment. The company will face a hard time if it doesn't make a change."

Coal mining has become a real alternative for property companies. Data shows that over 20 real estate companies have engaged in business in the mining industry. But some experts say the benefits will be limited.

Shi Jianjun, director of Strategic Research Center of Giant Wisdom said, "You only buy one coal mine, but you are not familiar with the entire system, and that would be hard to operate."

Shi added that even if a real estate company successfully buys a coal mine, uncertainties remain - like the integration of human resources, culture and management.