As home sales soften, Chinese developers look to insurance services to foster stable revenue
- Hong Kong-listed developer Greentown China Holdings will spend 2.72 billion yuan (US$390 million) to acquire a 11.55 per cent stake in Aeon Life Insurance
- Greentown’s effort to diversify into insurance follows a downturn in home sales during the second half
Amid a cooling market, Chinese developers are making a push into the insurance sector in an effort to forge stable revenue flows and offset volatile property sales.
Analysts said offering services such as insurance would enable the developer to take advantage of opportunities spun out by its property arm.
“It is natural for developers, especially an upscale market developer such as Greentown, to enter the insurance sector because selling insurance products is equivalent to offering value-added services to its existing customers,” said David Hong, head of research at China Real Estate Information.
Greentown has a reputation as an upscale home builder in eastern China. Greentown’s average selling price is 24,440 yuan per square metre, compared with 10,505 yuan for Evergrande, a mass market builder, according to September data.
“The acquisition is also in line with the company’s business principle of ‘being a comprehensive service provider of an ideal life in the PRC’, and diversifying its business in the People’s Republic of China,” Greentown said in the filing.
