Reality check for real estate companies

Dwindling profit margins prompt businesses to chart new strategies for development

Reducing reliance on home sales and diversifying offerings is not a new strategy for most of the property firms in China. But with sales falling rapidly and inventory pressures going up, most of the Chinese developers have started to speed up their diversification strategies with an eye on sustained, long-term growth, said industry experts.

In August, the Guangzhou-based real estate company Evergrande Group, already famous for owning a soccer team, established three subsidiaries for grain and oil products, dairy products and cattle farming. That marked a continuation of the diversification it had started in November, when it launched its first consumer product - bottled water.