According to Chris Brooke, president and chief executive officer of Greater China at CBRE, this partnership represents a new business model in the country's real estate industry. "This is the first time a domestic developer has established a JV with a service provider on a countrywide basis to provide these kind of management services," he explains. "Traditionally, it's been done either on a very project-specific basis."
CBRE has been offering property management services in China since the early 1990s, and today works with developers and owners of high-end residential projects. To date, it's mostly been in on an "ad hoc" basis, says Brooke, adding that the firm has been looking to increase its property management critical mass across China. CBRE currently manages 15 residential projects in China and the JV will initially manage 12 projects being developed by Vanke.
The JV, Brooke points out, is mutually beneficial. "Vanke had a program of working with partners as they focus on their core business, outsourcing some of the service areas of the business," Brooke relates. "They saw some benefits in terms of partnering with us, being able to outsource some of the higher-end proxy management and securing best practices from our global international network. We saw the benefit of working with that type of client in China and expanding our property management critical mass."
Based in Shanghai, the JV will provide services to high-end properties developed by Vanke and its affiliates. Most of the portfolio consists of apartments, but the mix could change as new projects are added. Other assets involved in the deal include single-family houses and town houses apartments. The venture should be operational by October. "We see the partnership not only as a major step forward in terms of the growth of our asset services business line in China, but also as an important milestone in relation to our development strategy within Greater China," says Brooke.
The growing middle class is driving the expansion of better quality residences in China, and that's working out to be a boon for CBRE. "Our primary focus is on project launches, primary sales and the management of higher-end projects where we can really add value," says Brooke. "The growing residential market obviously does present big opportunities for CBRE because of the greater volume of property, and there's more product coming in on the high end, which is where we feel we can add more value from a management perspective and potentially from a sales perspective as well," he adds. "We have a relatively small market niche that we're very focused on, and we're trying to build a business across the country that can provide real estate services to both domestic and international businesses across China. Overall, things are still pretty positive and the underlying fundamentals are pretty strong."
CBRE currently has 14 offices throughout Greater China, including Hong Kong and Taiwan. The company plans to further expand the geographical coverage and variety of services offered to clients throughout Greater China.
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