Property developers turn to smaller cities for higher returns in China

BEIJING, April 13 (Xinhua) -- A survey showed an increasing number of property developers turn to China's second-tier and third-tier cities for higher returns as land supply in big cities is about to reach its limit.

The survey was conducted by Syswinland Consulting, a Beijing-based firm specializing in land development and investment, the China Daily reported Tuesday.

It has been increasingly difficult for land developers to launch new projects in big cities such as Beijing and Shanghai, while there is greater potential in smaller cities because their land supply remains abundant, said the newspaper.

Hohhot, the capital city of Inner Mongolia Autonomous Region is one of those rising cities. It serves as the trade link between China and the Republic of Mongolia and Russia.

The city has a rich supply of land for future development, the newspaper cited Gao Zhiguo, a senior researcher with Syswinland, as saying.

Some developers have already moved their projects to smaller cities to seize this opportunity.

Evergrande Real Estate Group reportedly has development projects in 27 second- and third-tier cities, and reaped 90 percent of its sales from those cities in the first quarter of 2010.