North Americans tend to think that all new ideas come from Los Angles
but when it comes to condos, we may want to look to Asia.
As this article shows, in some ways, China is ahead of us.
Free grocery delivery: Chinese developers score with premium perks
Globe and Mail
31 August 2015
When Chinese developers started offering in-house services such as
beauty treatments to boost the value of their properties three years
ago, few expected the sideline to become one of their fastest-growing
revenue streams in otherwise tough times.
What began as something of a gimmick to attract middle-class buyers
with premium concierge perks has blossomed into a new financing
platform, with developers rushing to spin off their management units to
unlock their value.
Traditionally, developers offered little more than security and
maintenance services at their residential projects. But more apartment
towers now offer bonuses such as in-house takeout and grocery delivery,
tour reservations and even personal financial products such as wealth
“Two, three years ago there was no problem with selling any new
[residential] projects even in the third- and fourth-tier cities, so
people didn’t really care about services,” said Peterson Liang, deputy
executive director of Colliers International Real Estate Management
Services in Shanghai. “But today sales are not as good and there’s more
competition, so there’s a need to enhance.”
Top developer China Vanke is now looking to join the growing list of
its peers that have sold their one-stop-shop management businesses.
While management services provide only a fraction of developers’ total
revenue, any new income sources are welcome as the traditional real
estate sector has struggled with high land costs and excess supply.
Developers make an income from the services by charging commission fees
from outside contractors. Developers call it the “last-mile advantage,”
the distance from the gate of the housing complex to the elevator that
outsiders such as delivery staff are not allowed to enter for security
reasons. It’s here that developers can make money by offering in-house
services directly to residents or, more commonly, charging commissions
from third-party providers.
Country Garden, China’s sixth-largest developer by sales, saw its
revenue from property management soar 86 per cent in the first half
from a year ago, and said it expected the segment to continue to drive
profit. Even so, it still only accounted for 2 per cent of its total
One pampered resident, a 35-year-old company manager who moved to
Beijing from Hong Kong four years ago, said the services he enjoyed in
the mainland were much better than he remembered in his hometown.
“They offer to wash all the curtains in our home once a year for free,”
he told Reuters, giving his name only as Yu. “They also give the whole
family free tickets to an acrobat show.”