Luxury amenities

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
Clare Jim
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 management services.

“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 revenue.

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.”


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