China Vanke Co Ltd will strengthen the development of government-subsidized housing as part of its strategy to cope with the rigorous tightening measures in the real estate sector.
The company on Monday signed a deal with the Department of Housing and Urban-rural Development of Hebei province to build 6,000 to 8,000 government-subsidized apartments in the province, including low-rent and affordable housing.
“As long as the development of government-subsidized housing is profitable, even if the profit margin is merely 1 yuan (15 cents), Vanke will be happy to take part in it,” said Mao Daqing, the company’s vice-president.
Vanke will build about 500,000 square meters (sq m) of affordable homes at a cost of 1.6 billion yuan for construction alone. The company plans to collect 3 percent of that sum as administration fees.
According to Mao, Vanke will use innovation in developing government-subsidized housing and introduce environment-friendly techniques into the process. Strengthening the development of green buildings, in fact, is an important strategy for Vanke this year.
“We plan to double the floor space of green buildings this year,” said Ding Changfeng, Vanke’s executive vice-president.
Last year, Vanke built 1.06 million sq m of green buildings that met the three-star level set by the Ministry of Housing and Urban-Rural Development, a criterion similar to the LEED certification in the United States.
“Though some analysts are worried that increasing the development of green buildings will add to the cost and aggravate the company’s risks, we believe now is the time for us to strengthen the investment in technical innovation to sharpen our core competencies,” said Ding.
According to Ding, the latest round of tightening measures have affected both the demand and supply side, and business is expected to be affected since the supply of high-end housing will be restricted and that of low-end housing will be boosted.
“To ensure a normal operation is our bottom line, so we are adjusting the product lines and the production cycle accordingly. We will continue to focus on building quality housing for ordinary people, especially targeting the first-time buyers and upgrading purchases,” said Ding.
In terms of geographical expansion, Vanke said it will be more cautious in entering new cities. Instead, the company will focus on developing new projects in existing cities, he added.
In a statement to Shenzhen Stock Exchange on Friday, Vanke said it approved plans to offer share options for company executives and managers. The price for the stock option is 8.89 yuan a share, the company said previously.
Vanke’s shares retreated by 3.61 percent to 8.82 yuan on Monday.
