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China 2016: CATEGORIES IN BRIEF | Real Estate

INCENTIVES, LOWER INTEREST RATES, STIMULATE REAL ESTATE REBOUND

With a steep 50 percent rise in brand value, following flat results a year ago, real estate became the third fastest- rising category in the BrandZ Top 100 Most Valuable Chinese Brands 2016.

A critical part of China’s economy, real estate comprises around 15 percent of GDP, according to the International Monetary Fund, up from only around 4 percent in 1997. The 10 real estate BrandZ China Top 100 brands, in ranking order, are: Vanke, Wanda, Evergrande Real Estate, Poly Real Estate, Country Garden, Gemdale, Longfor, R&F Properties, SOHO China, and Greentown China.

The real estate sector experienced rising vacancy rates as China’s economic growth rate slowed and government subsidies disappeared. Higher land costs and lower sales prices squeezed margins. Total investment for the first 10 months of 2015 increased only 2 percent, according China’s National Bureau of Statistics. Demand began to strengthen late in the year, following government intervention to lower interest rates and reduce the down payment required for home purchasing, in some instances.

Two brands, in particular, drove the strong real estate category performance: Evergrande Real Estate, which increased 49 percent in brand value, making it one of the BrandZ China Top 20 Risers; and Wanda, which appeared for the first time in the BrandZ China Top 100, at number 31.

Evergrande Real Estate announced the acquisition of four up-market projects that the company said comprise the largest-ever real estate acquisition in China. Wanda develops multi-use commercial complexes that include o ce space, luxury hotels, and shopping centers. It belongs to Dalian Wanda Commercial Properties Company Ltd, a leader in sales, leasing and management of shopping centres, hotels and office space.

Innovation and expansion continued, despite the slowdown. In Guangzhou and Tianjin, R&F Properties opened new concept malls that balance shopping with entertainment and other leisure activities. Longfor, which develops residential and commercial property in top tier cities, entered the Nanjing market for the first time.

In an attempt to appeal to young, first-time buyers, Vanke introduced V-Home, a housing development featuring communal activities. Poly Real Estate launched a project for seniors with on-premises medical facilities. These initiatives reflect a change in approach that Greentown China calls, “selling lifestyles” rather than “selling houses.” The shift to Internet marketing was an aspect of the trend. Country Garden joined with insurance brand Ping An to fund a Shanghai project with crowd-sourcing.

Real estate developers also took their brands abroad. With a local partner, Gemdale invested in a mix-use complex of o ces, retail, and residential space in Los Angeles. Many Chinese real estate developers, such as Greenland Holdings, China Vanke and SOHO China have property holdings in New York City.