Ask AI · How can Longfor’s mixed-use operations enhance long-term asset value?

Produced by | Bullet Finance

Author | Huanhuan

Editor | Lightning

Graphic Designer | Qianqian

Reviewer | Songwen

2025 is the year when China’s real estate industry truly enters the “new and old kinetic energy conversion” phase. If in the past few years, property companies were still struggling at the survival line of “staying alive,” by 2025, leading developers have already charted a clear “second growth curve” with concrete actions.

This year, businesses such as commerce and property management are no longer just “attachments” to development projects but have become “ballast stones” to navigate cycles. The profit logic has also fundamentally changed: selling houses was once a one-time deal, but selling “lifestyles” and “asset management capabilities” is now a sustainable, long-term business.

1. The transformation node has arrived: commercial operations become the “ballast stone”

Compared to the residential market, which in 2025 remains in a deep adjustment phase of “controlling growth and destocking,” the supply and demand structure of commercial operations shows greater resilience. High-quality commercial assets in core cities are not saturated; instead, due to rigid demand and long-term cash flow value, they have become the “hard currency” for property companies to pass through cycles.

In 2025, the most notable feature of leading property companies’ financial reports is the qualitative leap in the contribution of commercial operations to performance.

For example, China Resources Land achieved an annual revenue of 43.28 billion yuan, with core recurring business net profit increasing by 13.1% year-on-year to 11.65 billion yuan, accounting for 51.8% of core net profit. As of the end of 2025, the company managed 98 self-owned shopping centers.

Longfor Group, in 2025, reported operating and service business revenue of 26.77 billion yuan, with a core equity profit of 7.92 billion yuan, and an overall gross profit margin exceeding 50%.

Longfor Group Chairman and CEO Chen Xuping revealed, “In recent years, Longfor’s operating and service profit has significantly surpassed the development profit, and this year, we expect over 10% growth, striving to reach a profit scale of 10 billion yuan as soon as possible.”

One phenomenon is that in the past year, the pace of leading property companies’ deployment in commercial operations has noticeably accelerated. Not only China Resources and Longfor, but also China Overseas Property, Poly Developments, Greentown, Yuexiu, and others have been active, indicating that during the deep industry adjustment period, positioning operations and services as new growth engines has become a consensus among property firms.

For example, at an earnings conference, China Merchants Shekou emphasized, “We need to truly transform from a traditional developer to a ‘developer + operator + service provider,’ and become China’s leading integrated real estate park development and operation service provider.”

2. The profit logic has shifted from selling space to selling lifestyles

The profit logic of the real estate industry is also undergoing a fundamental transformation aligned with the stage of economic development.

There has long been a view within the industry: in markets where per capita GDP is below $10k, property companies mainly act as “residential developers,” focusing competition on cost, scale, and speed. When per capita GDP exceeds $10k, companies begin transitioning from “developers” to “charge collectors,” shifting core capabilities from project management to value creation, ultimately evolving into “comprehensive operators.”

In Asia, CapitaLand in Singapore exemplifies this transformation into a “comprehensive operator.” Having entered China over thirty years ago, CapitaLand has experienced multiple real estate cycles and now manages over 300 projects across more than 40 cities. Its success hinges on upgrading from “selling space” to “selling lifestyles”: whether through the FOSUN and CapitaLand Mall brands or the coordinated operation of office and other formats, the core is to continuously inject vitality into assets through mixed-use operations.

Among domestic property companies, Longfor is a representative that has shifted along a similar path.

By the end of 2025, Longfor’s commercial portfolio in China includes 99 operational shopping centers, maintaining a high occupancy rate of 97%, with annual revenue and daily foot traffic both growing by over 15%.

In recent years, Longfor Tianjie has increased investment in upgrading flagship projects. For example, Suzhou Shishan Tianjie has undergone multiple renovations since opening eight years ago: in 2024, it created a semi-outdoor “Shanxia” street block, and in 2025, the original high-floor ice rink was transformed into a three-dimensional open “Valley” street block, turning previously less-trafficked high floors into hotspots.

In asset management, the combination of Huansi and GuanYu represents a “long-term rental apartment + vibrant neighborhood” mixed format. Take Hefei Huansi as an example: GuanYu tenants can work out and socialize downstairs, forming daily interactions with merchants and surrounding residents. Data shows GuanYu’s sales efficiency exceeds that of nearby competitors by over 50%, and more than 700 GuanYu tenants generate an average daily consumption of over 2,000 people for the neighborhood businesses. Both commercial leasing and apartment occupancy rates have exceeded 95%. This combination helps address operational challenges of small- to medium-sized commercial land plots to some extent.

In Chongqing Lijia, Longfor has implemented a broader business synergy case. From the opening of Chongqing Lijia Tianjie in 2020, to GuanYu long-term rentals, industrial office Blue Ocean engines, and residential products like Yuhuijing, public information indicates that another new Tianjie is in planning. Within this one-square-kilometer area, Longfor has gradually completed transportation, commercial, park, and residential infrastructure.

As the area develops, the functions of residential, commercial, and public spaces begin to complement each other. From an economic perspective, this concentrated multi-format layout produces significant positive externalities: residential provides a stable flow of customers for commercial, commercial enhances residential convenience and premium value, and public spaces improve overall livability, creating a positive synergy among the three.

For property companies, this synergy is most directly reflected in two indicators: first, faster absorption of residential units, shortening cash collection cycles; second, once commercial assets reach stable operation, rental income and occupancy rates become less volatile, making cash flow more predictable.

Therefore, operational capability in mixed-use formats is becoming a key indicator of a property company’s asset management level. The sharing of customer groups and functional complementarity among different formats directly influence long-term asset returns. All of this is based on understanding urban lifestyles: what kind of spaces people need, and what services they are willing to pay for. From this perspective, it is no longer just a developer’s business model but a long-term capacity-building effort.

3. Changing business structures to gain proactive control

Looking back over the past twenty years, Mitsui Fudosan is arguably Japan’s most successful real estate enterprise.

After experiencing huge losses in the 1990s, this company shifted away from relying on land appreciation for profits. It strengthened its leasing business investments and developed management services as new profit drivers. In recent reporting periods, Mitsui’s three main business segments—development, holding, and management—have gradually approached each other in revenue, leading to a more stable business structure.

Currently, China’s real estate market is at a historic moment where both incremental and stock markets coexist. Operating and service businesses targeting the stock market generate stable cash flow but have long investment cycles and slow returns; meanwhile, development projects related to incremental markets are more elastic but highly cyclical and uncertain. A core issue for domestic property companies now is how to balance these various business relationships.

At present, leading domestic developers are gradually strengthening their operating and service businesses, but development still dominates their revenue structure. For example, China Resources and Longfor, which are leading in transformation, had operational business proportions of only 15.4% and 27.5% respectively as of 2025.

This indicates that domestic property companies still have a long way to go to complete their transformation.

In 2026, the transformation process continues. China Resources Land proposes to strengthen resource allocation to core commercial districts and high-quality assets, while building multi-layered asset operation platforms and actively managing assets to achieve orderly asset inflows and outflows, promoting efficient capital circulation.

Longfor is also enhancing same-store performance on the operational side and expanding its service scope. According to plans, by 2028 at the latest, revenue from Longfor’s operating and service businesses will surpass that from property development, completing its business structure transformation.

Ultimately, competition among property companies boils down to the competition of models and business structures.

Whether it is China Resources, Longfor, or others, they all point in the same direction: future property companies must be excellent “urban operators” and “asset managers.”

Looking back from 2026, those companies that have led the way in transformation have already secured their tickets to the next era.

Image in the article sourced from: Shetu.com, based on VRF protocol.