Prawns replace abalone as China property developers go down-market
By Clare Jim
HONG KONG (Reuters) - The Chinese developer behind an eight-storey clubhouse with a billion-dollar view over Shanghai's Huangphu River is turning to lower-end coffee shops and restaurants to fill the space, as a broad anti-graft campaign puts the brakes on conspicuous spending.
The state-of-the-art, steel and glass building was originally designed as a playground for China's elite, including space to mix and mingle with officials from state-owned enterprises based in offices nearby.
"Last year, we originally planned to open a clubhouse in the building, but it became too sensitive," said Vincent Zuo, a manager of research and development at Franshion Properties 0817.HK, which has a market value of $2.7 billion.
"We are now looking to open restaurants and coffee shops," said Zuo, adding that an art museum was another option for the arch-shaped building which sits in the middle of the company's 30 billion yuan ($4.8 billion) cruise terminal complex.
The decision to target middle-market consumers comes amid a crackdown on official corruption and extravagance in China that is forcing some high-end developers and hotel operators to change tactics to adapt to the new environment.
Franshion, a unit of state-owned Sinochem Corp which also operates the five-star Grand Hyatt Shanghai, has shifted its hotel focus more towards private events from government and business dinners. The number of wedding banquets is up 50 percent from last year, said Andy Ding, vice president of Franshion's unit China Jin Mao Group.
At the same time, consumption per head among business clients has dropped by about 30 to 40 percent since the crackdown began in 2012. Where once the average spending was around 1,000 yuan per person, now it is 600 to 700, Grand Hyatt Shanghai's manager Grace Tsou said.
CORRUPTION HANGOVER Continued...