“This is perhaps the so-called ‘Big Billows Beat the Sands’”, Zhang Xiaofeng, Assistant President of Gemdale (Group) Co., Ltd., Chairman and Managing Director of Beijing Office, Gemdale Group (600383), evaluated Gemdale’s performancein this round of regulation in Gemdale Center, Beijing CBD.
“Gemdale Group had set up the strategic planning of ‘One Core, Two Wings’in 2010, this is a result of the accumulation of practical experience and technical level as well as the background of the market circumstance. The reason to issue the new product line at this time is that we discover the pursuit of customers for developers’quality and details is increasing, which is also what Gemdale is constantly pursuing for.”
On July 8, Gemdale Group held the housing industry brand conference in Shanghai. On which it officially launched its four product lines of “Brown Stone, Eminence, Azure, Aristo” with the core value of “leading a human-oriented life” and expressed that the company would continuously adhere to the philosophy of “human-oriented”. It is reported that Gemdale have spent two years researching on the product lines and subdivided the main customers corresponding to each product line to define their requirement attributes in detail and transform them into the innovative and value points of products.
“Gemdale has adhered to the philosophy of ‘Science of Living’for many years. Gemdale has been doing its products attentively from the viewpoint ofhuman-oriented, and built a lot of boutique products across the country. During this period of time, the company has been getting its idea into shape to gradually expand the four product lines nationwide since last year”, Zhang Xiaofeng explained the original idea on the product line research.
The core of the four product lines lies in three characteristics, that is, humanistic style combining original classics with culture connotation, comfortable humanized functions, warm communication-oriented community, to keep their distinct characteristics and leading connotation and to create housing industry brand.
CITIC Securities (600030) pointed out in a research report on Gemdale that the most obvious advantage that distinguished Gemdale from other nationwide development companies was its excellent product creativity.
Gemdale Group has been moving forward for 10 years in the capital market since its listing in 2011. The formal launch of the four product lines is exactly a powerful support to its strategic framework of “One Core, Two Wings”.
“One Core, Two Wings”
In 2011, Gemdale Group’s strategic framework made a major breakthrough based on the original, clarified the development strategy of “One Core, Two Wings”, i.e. “ housing industry as the core, commercial real estate and financing sector as the two wings, to develop coordinately to become a complex real estate developer”, and built and improved the corresponding organization structure and work flow based on the strategic planning achievement with the final goal to become a complex real estate enterprise. Ling Ke, Chairman of the board of Gemdale Group has spoken many times to the public that the Group’s new business model would become the core competitiveness for a long-term development.
Ling Ke once said that the Group had planned out the strategy at the end of 2010 to become a complex real estate developer in the development way of “One Core, Two Wings”. The new strategy is an expansion and deepening of the Group from housing into new business sectors.
Meanwhile, Gemdale paid more attention to “fine” and “quality”. In the explanation of “One Core, Two Wings”, Ling Ke held the opinion that Gemdale would not choose to simply expand its scale. In the traditional housing field, Gemdale still holds an optimistic attitude towards the development in the next 5-10 years, and it will speed up the product development pace and enhance development efficiency to improve the market share of its housing products.
Commercial real estate and real estate finance sectors are the profit growth points of the Group. Ling Ke, Chairman of the board of Gemdale Group, and Huang Juncan, President of Gemdale both attached great importance to the two sectors with hands-on leadership.
The commercial real estate development will make use of the financing platform located in the inland, Hong Kong and overseas regions to establish commercial projects with distinct characteristics in the core areas of core cities, like the commercial complex. WINS Investment set up by Gemdale will continue to launch RMB funds and USD funds raised and managed by WINS Investment. At appropriate time, Gemdale may also do some creative products of commercial real estate funds, industry real estate funds, indemnificatory housing, etc.
Therefore, Gemdale has set up a professional commercial real estate company, specializing in the regional city complex. At present, the commercial assets managed by the Group include Beijing Gemdale Center, Shenzhen Gangsha Commercial project, Xi’an commercial project, etc.
On June 30, Gemdale announced to the public that Famous Commercial Ltd. registered in Hong Kong and wholly owned by Gemdale, as the buyer, consulted with BILLIONUP LIMITED, Chinese Estates Holdings Limited’s indirect wholly-owned affiliated company, as the seller, on purchasing 61.96% shares of Genesis Property and reached an agreement on the relative equity trade, and the board of directors approved the company to purchase such shares for about 836 million HK Dollars through Famous Commercial Ltd.
The purchase of the shares of Genesis Property now can be taken as a possibility of overseas financing. In respect of Gemdale’s purchase, PING AN Securities made a report that it would provide a financing platform for Gemdale’s commercial real estate development, which matched with the strategy of greatly developing commercial real estate of the Group.
But according to the latest report, due to the precondition of the buy-sell agreement had not been fully reached or obtained exemption on July 29, the agreement would become invalid after July 29. Neither of the two sides disclosed or made a comment on any details.
Early in August 2008, Gemdale and UBS Global Asset Management co-launched “UBS - Gemdale China Real Estate USD Fund” and completed the first-phase fundraising of about USD 120 million in March 2010, and the second-phase fundraising in December 2010, now the fund reached nearly USD 200 million. In 2010, WINS Investment started to set foot in RMB real estate fund and invested in two residential projects of the 1st phase of Shenzhen Guanlan project and Wuhan Sixin.
According to Gemdale’s plan, the commercial real estate and real estate financing will reach respectively RMB 60 billion Yuan in the next 5 years.
Expansion in North China
Zhang Xiaofeng held the opinion that the launch of the four product lines of “Brown Stone, Eminence, Azure, Aristo” made a great contribution to the overall development of the Group. Firstly, the four product lines have clear and distinct characteristics and value proposition, which can meet the requirements and value proposition of various customers. The Brown Stone line represents the elegance and favor that the middle class is proud of; the Eminence refers to the cultural community designed for the new rich class; the Azure represents the 3rd generation of mansion; and the Aristo is designed to be century classic housing.
“Gemdale has realized that the new generation of high-end consumers paid more attention to quality compared with the previous. Therefore, Gemdale could focus on providing modularized functions for customers. As different products correspond to different designs, materials, landscapes and other modules, Gemdale can realize fine in each professional sector.
“This mode would improve product development efficiency and turnover cycle”, added Zhang Xiaofeng, in future, 80% products would be incorporated into the product lines, but not limited to them. Gemdale would continue to adhere to the design with different styles, for example, Guangzhou Lihu City with modern style, Shenyang Mingjing Project with classic style, Nanjing Zizaicheng which are uniquely designed and completely match with the creative spirit of the product though they are not in the four product lines.
In the choice of region, Shanghai with strong high-end demands is always the largest gathering place of customers for Gemdale. However, Gemdale now is putting more investment in other fast rising regions. For example, North China is a region that Gemdale would focus on in the next round of development. Zhang Xiaofeng disclosed that in 2011 North China had contributed about 20% to the Group, with an increase of 6% than that in 2010 (14%).
In Gemdale’s business layout, North China covers Beijing, Tianjin, Shandong, Hebei, Shanxi and Inner Mongolia. According to the overall plan, 4-6 projects will be added to the North China in 2011, and 5-8 in 2012. The Group will based on the current coverage in Beijing, Tianjin, and Yantai of Shandong province, set foot in Shijiazhuang, Tangshan and Qinhuangdao of Hebei province, Jinan and Qingdao of Shandong province, Taiyuan of Shanxi province, Baotou and Hohhot of Inner Mongolia in the right time.
Zhang Xiaofeng estimated that the sales in the North China would breakthrough RMB 10 billion Yuan by 2012, and RMB 15-18 billion Yuan in 2013. At that time, the overall investment and sales in the North China would account for 20%-25% of the Group. This year in Beijing, besides Gemdale Yangshan, one of its main sales forces that has been opened, Gemdale will push forward its large-scale cost-effective Gemdale Langyue with an area of 300,000 square meters in Liangxiang, Fangshan District. In addition, the international community in Tianjin of Ziyuefu, Ziyunting, Tuanbohu, and Green World Sanshifeng will successively be launched; Yantai High-end project of Gemdale Lanyue, and another large complex high-end project is in full swing.
“In the North China, Beijing and Tianjin account for 40%-45% respectively. In 2012, Beijing will continue to keep its share in North China, but Tianjin will reduce to 30%-40%, as Shandong increases its share, Hebei will initially account for 5%-10%. The Group hopes to guarantee its development in the first-tier cities and second-tier and third-tier cities”, added Zhang Xiaofeng.
Looking from Zhang Xiaofeng’s office in Gemdale Center, you can see Gemdale International Center located in the other side of the road that was developed when Gemdale first set foot in Beijing. Zhang Xiaofeng recalled that 10 years ago, Gemdale International Center was very popular in the market, the same to Gemdale Green Town at the opening ceremony 7 years ago. Though facing the regulation in 2011, he is still full of expectation to Gemdale Langyue.
Regardless of the high-end demand for villa, or the rigid demand for the first home, Gemdale has been always doing products for these years. Despite the change of the market, the companies focusing on doing products will always go on well.
