China’s property giants accelerate land purchases, leverage scale to squeezed out smaller players

China’s property sector has increasingly become a battlefield between major developers seeking to leverage scale over profit, using their size to squeeze out smaller players who struggle with less preferential lending rates and other market barriers.

Making it on to the rankings of the largest property developers by annual sales has taken on increasing importance in recent years.

Beyond honour and reputation, the result matters for companies in securing resources to remain competitive in coming years.

“I know a boss of a developer who kept urging his staff to race into the top 100. He said banks wouldn’t consider giving him loans unless he made into the top 100,” said Ouyang Jie, vice-president of Shanghai-listed Future Land.

Wang Xi, executive vice president of Yanlord Land Group, a mid-size Shanghai developer, said size was important when it came to doing business.

“If you don’t have size, local governments won’t sell you land, banks won’t lend you money and buyers won’t trust your brand. So scale is implicit endorsement. Scale decides your resource integration capability. Scale decides if you’re relevant,” Wang said.