Advice for Small Fish in China’s Real Estate Market: Swim Fast | Waccabuc Real Estate

For the minnows in China’s property market, swimming near the bottom of the real estate food chain can be dangerous. The smaller you are, the more likely you are to be someone else’s dinner.

And it is getting harder to stay clear of the bigger guys, particularly as Beijing keeps up its three-year campaign to curb real estate prices.

Bloomberg News

Residential buildings stand in Shanghai, on Sunday, June 30, 2013.

“Being a small fish is getting more difficult. The bigger fish are swimming faster,” said Kai Chen, chief executive officer of mid-sized developer Yango Group. “I expect that in eight to 10 years, China’s top 10 developers will have 20% of the market.”

As of the end of March this year, the top 10 developers had around 16% of the country’s total property sales.

Speaking at a real estate conference this week, Mr. Chen shared a few tips on how a small outfit like Yango has managed to survive in an environment where smaller developers are seen as an endangered species.

Tip No. 1: search for partners. In the past, smaller firms have been known for taking big risks for a chance at an outsized return. But they have often been reluctant to share the profits, he said.

“Smaller firms should change their mindset and form more partnerships, so that they can get more access to financing and land,” said Mr Chen. He noted one innovative partnership by his company with wealth management firm Noah Holdings, adding the firm has received substantial financing this way.

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