Developers turning to tourism

While Shenzhen-listed Xiamen Insight Investment Co posted a first-half net loss of 186,600 yuan ($29,327) Monday, the small-scale real estate firm is still proceeding with plans related to its new venture in the tourism industry, an area that many Chinese property firms have been tapping into recently.

In a filing to the Shenzhen Stock Exchange, Insight Investment said it inked a strategic agreement in July with its affiliate Insight Leisure Tourism Development Ltd to develop a planned 19.5-square-kilometer theme park in Anji, Zhejiang Province. According to the agreement, Insight Investment will participate in the commercial development, marketing, property leasing, property management and other business aspects of the project with an estimated investment of 7 billion yuan.

With many Chinese real estate firms facing declining profits thanks to government curbs aimed at cooling off the country's residential property market, Insight Investment is just one of several local developers that have their sights on tourism-related properties, say experts.

Among the 61 mainland-listed real estate developers that had released their mid-term reports as of Monday, 30 saw year-on-year decreases in their net profits, according to statistics from financial information portal 10jqka.com.cn.

Despite the residential property industry's downturn, tourism-related properties have received a huge amount of funding from developers in recent months. Around one third of the country's top 100 real estate developers have invested in tourism properties according to statistics from consulting institute ChinaVenture Group. Also, during the first quarter of this year nearly 70 new tourism property projects were announced, involving a total investment of over 260 billion yuan, according to a recent Nanfang Daily report.

"As tourism projects are usually located in suburban areas and thus are not subject to the same stringent restrictions the government has placed on most commercial properties, many real estate firms that have recently begun to develop properties are just labeling them as tourism projects," said Yin Bocheng, director of the real estate research center at Fudan University.