Shimao shares CFO Chen Ruxia layout preemptive machine to local conditions to do business

2010 July is definitely a memorable month for the commercial real estate sector. At the beginning of the month, the most profitable real estate company, hang Lung property will be a high rent growth model from Shanghai to replicate, in Shenyang Imperial Palace, the development of the Shenyang Imperial City Commercial Plaza; In the month, this domestic commercial real estate domain's "eldest brother" developer announced the first half sales reached 36.2 billion yuan,　　After one quarter more than Vanke became the first domestic real estate sector. At the end of the month, the A-share commercial real estate listed company leader Shimao shares (600823.SH) also surrendered the first half of this year net profit growth of 700% of the beautiful report card.　　That seems to herald the start of the restructuring of the Shimao stake in China's commercial real estate sector last May. Recently, Shimao shares chief Financial Officer Chen Ruxia accepted the "Daily Economic News" (hereinafter referred to as NBD) interview. He said commercial real estate was increasingly concerned about the continued steady rental returns and higher property appreciation space.　　So for real estate developers, the sooner they enter this area, the more opportunities they will get in the future. Advance into the two or three-line city NBD: Last year, Shimao shares completed restructuring, began to focus on commercial real estate development and management. This year, there will be a large number of developers to follow up.　　Why do commercial real estate, which has barely developed in the past decade, suddenly attract so many residential property developers? Chen Ruxia: Some developers are entering the commercial real estate sector because of the immediate crisis. Residential development may still be booming for ten years, but it could be a bottleneck in 10 years. Commercial real estate is likely to become a major source of revenue for future real estate developers because of its steady and sustained growth in sales and rental income. Many developers have seen this before entering the commercial real estate development field.　　However, the development and operation of commercial real estate needs the accumulation of experience, many developers from housing restructuring may not be able to quickly produce results.　　NBD: In the past ten years, the development of commercial real estate lags far behind the development of housing, mainly because of the lack of experience of developers? Chen Ruxia: There are a number of reasons why commercial real estate has not developed as much as a home in the past ten years. First of all, China's housing market has gone through more than 10 years of development, but commercial real estate has just arisen, which is related to economic development. The development trajectory of the world's developed economies proves that once an economy has a per capita GDP of $3000 trillion, business will enter a full-scale development phase. In addition, there is a relationship between residential development and commercial real estate development, first, the development of residential real estate can be the rise of commercial real estate.　　In addition, compared with residential, commercial real estate development is difficult, cash reflux is not as fast as residential, which led many developers are more willing to develop residential.　　NBD: What do you think is the future of commercial real estate in the next few years? Chen Ruxia: The state has clearly expanded domestic demand and promoted consumption is the way out of China's economy. Although this is not an overnight thing, in the next few years we will see the national consumption demand will be more and more vigorous. The increase in consumer demand requires a large number of commercial services, which is the opportunity for commercial real estate。 In addition, in recent years the national two or three-line city's consumption capacity has been greatly enhanced, many cities in the retail industry demand has become very strong. For example, our commercial projects in Shaoxing, because the local strong consumer demand, attracted a lot of only Shanghai and other first-tier cities have high-end brands.　　We think that the commercial real estate in the two or three-line city will have a good opportunity, we have entered these cities ahead of time, because the pioneers of the world, only to walk in front of other developers, will win more business opportunities. Development follow "local conditions" NBD: Shimao shares are not fully owned by the development of commercial real estate projects, this is why?　　Which commercial property will the Shimao share be held? Chen Ruxia: About 30% of the commercial real estate projects we develop are owned by ourselves and 70% for sale, partly because of the need for money and the need for performance. As to which holdings and which to sell, it depends on the location of the project and the merchant. Although our merchant has cooperated with us for a long time and has a good relationship, but they also have business considerations, we will choose the consumer population and purchasing power to support the commercial real estate projects they run.　　And for those very good business projects, we will choose their own business, such as our plan for the end of next year, Beijing Shimao department store flagship store is our own possession of the property, the project's better geographical location, large operating area, the project surrounding the strong consumption, the future is very promising. NBD: And some developers in the same mode of replication across the country, the Shimao shares of each commercial real estate projects are different, this is why?　　Does this lead to the risk of commercial real estate development and operation? Chen Ruxia: Our principle of developing and operating commercial real estate projects is "local conditions". Only in line with market demand, can we ensure the success of the project, thus obtaining a higher rental return. For example, Shaoxing's per capita GDP is higher, consumption ability is strong, so Shaoxing Shimao Plaza Project positioning is more rich, both luxury brands, and middle and low brand. For example, Kunshan project, although the purchasing power of local consumers is not weak, but too close to Shanghai, passenger flow is easily diverted by Shanghai, so the Kunshan project to meet the needs of the local day-to-day brand. It can be seen that if we develop the same commercial real estate projects in Shaoxing and Kunshan, it is difficult to have higher returns, which is the main reason why we do not adopt the same model in different cities.