Gemdale Properties & Investment’s Way for Business Layout: To get to High Ground by Strategy and achieve Victory with Products

From: Shanghai

In recent years, with the acceleration of China’s industrial structure upgrading and urbanization, industrial real estate has become a total solution to the problem of industry hollowing and real estate bubbling, especially become the core direction of combining the national macro development strategy with enterprises’ urban operation strategy in the “mode of city-industry integration”, namely the coordination of industrial development and urban development. Accordingly, industrial real estate has become an attraction next to traditional housing development, with many developers throwing themselves into industrial real estate development.

Gemdale Group’s subsidiary Gemdale Properties & Investment, a listed company of Hong Kong, started making planning for industrial real estate two years ago, and is about to roll out a number of projects in Shanghai at present. Faced with market challenges such as shortage of spaces for industrial development in first-tier cities, an excessively long construction cycle and tight budget and increasingly fierce industry competition, how does Gemdale Properties & Investment explore a way to break the bottleneck?

Upholding Altruism to develop the Industry for Industrial Development

As can be seen from national industrial real estate, there are only limited spaces for development in first-tier cities, such as Shanghai, and key second-tier cities, whereas the government marks off only a small amount of industrial land annually. However, those cities have good industrial environments and resources, suitable for industrial real estate development.

Adhering to the idea of making strategy arrangements in the first and second-tier cities, Gemdale Properties & Investment pays attention to newly added industrial land and stock industrial land in a bid to expand its business.

According to Administrative President of Gemdale Properties & Investment Xu Jiajun, there are many plots of industrial land approved for commercial use 10-30 years ago in Shanghai, but currently, there are not sufficient high-level industrial enterprises on the plots of land. In the process of industrial structure upgrading and adjustment, some enterprises are disadvantaged and poorly operated. Especially, some are environmental pollution sources.

By actively cooperating with the local government and enterprises, Gemdale Properties & Investment has replaced the polluting low-productivity enterprises with higher-quality companies. This model has won popular support from the local government.

At present, many companies are unwilling to carry out development and construction even if they have rented land from the government. Gemdale Properties & Investment is able to provide a high-quality industrial space for those enterprises, and according to Xu Jiajun, Gemdale Properties & Investment is willing to cooperate with the energetic enterprises.

Currently, industrial real estate developers often balance their cash flow during development by selling houses because the industrial land needs “financial support”, and this requires that the enterprises introduced must run well. In the future, Gemdale Properties & Investment will adopt more withdrawal and financing means in a financial way to finally realize capital balance by “industry real estate + finance” rather than nurture industry real estate with other types of business. That’s how Gemdale Properties & Investment is different from other industrial real estate developers. In order to clearly define this idea of development, Gemdale Properties & Investment has set up Gemdale Weixin Industrial Real Estate Company for capital operations.

Xu Jiajun told Gemdale Properties & Investment has a clear idea of development and carries out industrial real estate development with an altruistic attitude rather than “develops industrial real estate in order for residential properties”.

Achieving Victory Futuristic Products to provide a Development Space for Enterprises

Gemdale Group acquired Frasers Property, a company listed on the Hong Kong Stock Exchange in 2012, and officially renamed it Gemdale Properties & Investment in 2013, regarding it as an overseas listed platform that specializes in urban complex, office building, industrial park and hotel. After more than five years of development, Gemdale Properties & Investment has grown into a large-scale housing company. In first 11 months of this year, its sales reached up to RMB40.2 billion, with year-on-year growth of 113%.

Industrial real estate is the first field of interest for Gemdale Properties & Investment. Reportedly, Gemdale has more than 15 industrial projects in the USA, Shenzhen, Beijing, Shanghai, Dongguan, etc. Gemdale has listed the industrial sector as a key business area. In the future, it will grow into a “partner of Chinese industrial development”. The goal of Gemdale is to implement more than 30 industrial projects that cover an area of over 6 million square meters in three years. This year, it has successively rolled out four projects in Shanghai, including Jiading, Minhang, Songjiang and Baoshan. Each of the projects covers an area of over 100,000m2.

During strategic expansion, Gemdale Properties & Investment has established extensive contacts with a lot of institutions at home and abroad, including industrial research institutions, high-tech research institutions, industrial incubators and high-tech funds, aimed at providing high-quality resources for industrial investment attraction.

According to Xu Jiajun, Gemdale Properties & Investment specializes in real estate development and knows very well the demands for physical spaces in industrial parks; its products are 5-10 years ahead of current industry needs. He took e Shenzhen Weixin Software Park as an example. The project enjoys high attention in Shenzhen because of its forward-looking planning idea and space conception. Gemdale has long foreseen what many enterprises will require, and developed solutions in advance for every aspect, such as floor height, load bearing and supporting facilities construction.

Gemdale Properties & Investment’s 4 industrial projects in Shanghai have a core theme respectively. For example, the one in Jiading is themed by new energy vehicles. According to Xu Jiajun, an industrial real estate project should be developed based on local strong industries, but meanwhile a space needs to be reserved for new industries. They will be committed to introducing a number of key enterprises to gather the relevant upstream and downstream industries together to finally build an industrial cluster for further industrial development.

However, it is not easy to form an entire industrial chain unless the operator has strong abilities to train the industry, control the direction of industrial development and have a deep understanding of these enterprises. Gemdale Properties & Investment is committed to providing the best service and space for those enterprises.

At present, Gemdale Properties & Investment is very concerned about many areas, including electronic information, new energy vehicles, biomedicine and artificial intelligence, as well as the new industries formed of traditional industries based on the internet.

Setting foot in joint office business to establish links with small and medium-sized enterprises.

For Gemdale Properties & Investment, which primarily serves medium and large-sized enterprises, joint office business is a new area but a currently popular field of industrial real estate.

Gemdale Properties & Investment started making planning for joint office business. According to Xu Jiajun, currently, there are a large number of small and micro enterprises and start-ups, especially in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen. Those enterprises and start-ups are very dynamic and technically sophisticated. If we don’t provide a development space for those small businesses, but build ties with them in their infancy, we will have great difficulty retaining them in the future.

This is because for a company, when it gains some popularity, it will draw attention from many industrial parks. So, we hope to pay attention to these small and micro enterprises at the very beginning. Gemdale Properties & Investment does not intend to achieve profitability or digest redundant industrial spaces through joint office business, but hopes to establish contact with small and micro enterprises in this way. It just thinks strategically with a forward-looking mind in order to make it possible to introduce enterprises in the future.

In the main industrial parks owned by Gemdale Properties & Investment, there are reserved spaces for small and micro enterprises. Shenzhen Weixin Software Park has developed a joint office product—IBASE Joint Office, which covers a total area of 120,000m2, home to about 3,000 joint office spaces. Similar planning has also been made in Jiading District, Shanghai City.

Xu Jiajun points out that many enterprises are developing very rapidly at present, so it is not necessarily easy for them to find a workshop immediately. Our joint office product can also be used as a transition product, and such a flexible space, which has high flowability and needn’t occupy a high percentage, is necessary and meaningful to prepare.