【Media report】DDI: TransitionFromProperty Developer to "Middle- classLife Service

Jun,21 2017

      Recently, DDI Chairman LI Hailinand President of Overseas Business Development LIU Chun have been interviewed by“The Paper”.

      Recently, DDI Japan has completed the acquisition and delivery of two office-building projects in Ebisu and Heiwacho.When interviewed by “The Paper”,DDI Chairman LI Hailinclaimedthat while most of the property companies focused on the domestic inventory market, DDI hadalready aimed at the global market, transformed to a “modern service enterprise”, positioned "middle-class life service providers” developed “Club +” concept, and made use of the overseas resources to provide excellent services for domestic middle class.

Expand the international market

      DDI, founded in Shenzhen in 1989, is headquartered in Shanghai. DDI entered the American market and launched the overseas investment in 2004. Last December, DDI and Japan VORTEX Company signed a strategic cooperation agreement. In June this year, the joint venture company completed the acquisition and delivery of two office-building projects in Ebisu and Heiwacho, signifying that DDI has officially entered the Japanese market.

      LIU Chun, Assistant Chairman and President of Overseas Business Development, introduced that projects of Ebisu and Heiwachowere locatedin a good place withinYamaNoteLine of Tokyo,. The Ebisu project is located in Shibuya District, surrounded by famous business areas in Tokyo. It covered aconstruction area of 2,252.62 square meters, with 9 floors above the ground and 1 basement. The Heiwacho project is located in Chiyoda, adjacent to the royal residence. It is a 10-storey office building with a total construction area of 1,665.75 square meters.

      LIU Chun told the journalists of “The Paper” that the two office buildings were veryidealregarding the original architectural conditions, and now they were open torentafter simple renovations. "The two projects are 100% owned by us for rent. After renovation, we have obtained official documents for renting according to levels, and divided the buildings into several unitsfor rent. Till today, the Heiwacho project has rentedout more than half of units in advance. The annual yields of the two projects areexpected to be above 20%."

Ebisu Project in Tokyo, Japan

      Japan is the fourth overseas market that DDI entered after the United States, Canada and Hong Kong. LIU Chun told journalists that DDI chose Japan not only because DDI valuedJapanesepotential after successfully bidding for the 2020 Olympic Games, but also becauseDDI hopedto take theacquisition of the Tokyo offices as the starting point to developthe Japanese service industry and accumulate more experience and resources in retirement, hot springs, science and technology and so on.

      "Japan has excellent resources in terms of retirement, hot springs and so on. This is consistent with the transformation and positioning of our group as the service provider for the middle class. The acquisition of office buildings is a key for us to penetratinginto the Japanese market and acquiringthe resources, experiences and talents." LIU Chun said thatDDI hadalready signed a cooperation agreement with a Japanese hot spring company andwouldhave further cooperation in the future. "We would like to make use of theJapanese relatively superior management and service experience and introduce more talents, so as to provide better service for the middle class in China."

Transform to “modern service enterprise”

      For DDI, the most important purpose ofthe acquisition of the Tokyo offices is not to invest in property itself, but to further understand the Japanese market and service industry, and then to seek opportunities for cooperation, so as to promote the development of the “Club +” concept and provide excellent services for the middle class in China.

     In 2013, DDI established the first domestic family-oriented top private club in Shanghai, and gradually set up clubs in Qingpu, Shanghai and Nova Scotia of Canada and other places to customize and provide top-class, rich and private family entertainmentfor middle-class families.

      DDI Chairman LI Hailin told journalists that the current positioning of DDI wasnot the traditional property enterprise, but the "modern service enterprise". DDI hopedto regardthe middle class as the main customers and the "club" as the carrier to provide services invarious aspects. LI Hailin summed up this exploration as “Club +” concept. “The club first appearedin England in 1641. At that time, the emerging social elite and the royal nobility needed private places besides the palace, and the club provided them with such a place. Our “Club +” concept not only copies the functions of the European club, but also offers more localization features. For example, we have built the hot springs spa club because Chinese like the hot springs spa; we have purchased land in Chongming eco-island to develop high-end club projectstaking into account that the returnees concerns about the quality of the air and the environment."

Heiwacho Project in Tokyo, Japan

      Currently,how to carry out"club +" concept is one of the important issuefor DDI. A few years ago, DDI established the first domestic family-oriented top private club in Shanghai——Shanghai Town & Country Club. The club can meet the needs of a family from all aspects, from catering, fitnessfacilities to children's playground. Italso provides them with places for communication, so that the members canformtheir own communities here.

      As per implementation of the “Club +” concept, in addition tothe establishment of Town & Country Club, DDI has also cooperated with many developers to develop the middle-grade and high-grade community clubs. LIHailin told journalists that DDI’s community developmentwasmainly divided into two types: contract management(i. e. the developers transform the existing community clubs with poor management) and output management(i. e. planning new clubs for the developers before sellingthe building, so as to enhance the value of the new real estate).

      Besides the "Club+" concept in the domestic market, DDI also plans to develop its modern service business in the global market. "First, we plan to form 200 clubs in China within three years, and then move into the Asian market. Second, we wish to gradually enter the European market with the North America as the center. “LIHailin told journalists that the property enterprises were in transition in different ways. “Somestart from the property management. Some take the technology as characteristics. However, DDI has chosen the modern service industry."