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The Wonderful Trip of Tourism Real Estate

Tourism real estate is a fashionable and strange notion for most people. I think this notion is not only a fresh one for China, but also for other countries in the world.

In my understanding, there are two levels of meaning in the notion of tourism real estate.

The first level—the notion should be positioned as real estate differentiation management with the tourism resources as the core.

The second level—the tourism resource differentiation management with the real estate as the core.

As to the first level, it refers to the development of real estate relying on the rare and unique scenic spots, such as Time Share, High- quality Villas, Resorts, Property Hotels and son on. In this way, the appreciation space depends on the fame and popularity of the scenic spots. Generally, if the resource is rare, unique and unduplicated, then the value of the property might be high. For example, Zhongkun Group developed the resorts relying on Hongcun, the world cultural heritage, which drew the attention of the society. The risk of such investment is very low, for it relies on a rubber industry with little fluctuation. The industry develops very fast in 21st Century except for some irresistible factors, so the property value based on such an industry will also get profit after some time.

As to the second level, it mainly refers to the development of artificial scenic areas and spots, to form a complete set with the development of residences, hotels and societies, such as Shanghai New World, the Window of the World and Overseas Chinese City in Shenzhen, Changhewan in Beijing, and even some small projects such as the decoration of the lobby of White Swan Hotel in Guangzhou. The development of these projects relies on the understanding in the culture of the city as well as of the whole society, and in the understanding of the relationship between urban architecture and the space. The investment of this kind of project also relies on the developing trend of the national and international economy. For example, when the state’s policies are not favorable for the development of the real estate, the projects might be limited in development.

The above judgments are experiences accumulated in our practice. Anyway, the enterprises choosing this trade should seek new developing space and modal. It can either become a professional enterprise, or have multi modals, avoiding the modal seeking the sudden profit. We should try to find a way of existence ensuring the healthy and sustainable development. Seeking temporary relief regardless of the consequence is a way that leads to the bankruptcy of many industries.

The raising and forming of the notion is a new hope for the industry of real estate to combine with tourism and get benefit from the combination. In the coming 10 to 20 years, the development of China’s tourism will draw the attention of the whole world. As a country that has an area of 9.6 million square kilometers with many nationalities, and that maintains a long-term stability in politics and society, China owns various and characteristic tour resources, which is very rare in the world. In the future 10 to 20 years, some western countries will have to be busy in anti-terrorism actions, when the situation is favorable for China to rapidly develop. It will be a prime time for China to develop its tourism, and it is wise for the industry of real estate to seize the opportunity to combine with the tour resources during this period.

Besides, along with the development of the national economy and the evolution of cities, there has been a revolution in traditional ways of travel. It can be predicted that holiday leisure, company tour, business trip and new domestic finance based on investment in Time Share and property hotels will definitely come into being. The traditional tourism and the enterprises might not get used to this new circumstance, and could cross the industry to combine with the real estate. Instead, the sufficient fund support and rich developing experience of the industries of real estate make sure that they could easily integrate the two trades, which is the feature and hope of the flouring of tourism real estate in China.

However, several problems must be considered before entering the trade of tourism real estate:

First is the problem of protection. Protection includes two aspects. One refers to the protection of the environment. The development in the rare, unique and unduplicated scenic areas must avoid destroy and over development. The enterprises must have the consciousness of environmental protection. The first thing is to make evaluation to the environment. We can’t destroy the environment above or under the ground, or there will be natural disasters, and the enterprises can’t exist. The other protection is more important and more comprehensive. It means that we must conform to the plans and designs for the scenic areas, as well as the related policies of the country, and even can make suggestions to some conservative and backward plans, offering stricter plans for development.

Second is the theoretical preparation before entering the trade. We must know about the developing trend of the tourism at home and abroad. The notion of region has enlarged and so it is with the planning for tourism development of some countries, but in fact people only care about the uniqueness and characteristics of a certain scenic area, such as the scenery in Gui Lin, the Niya Ruins in Xinjiang, and so on. Besides, we must notice that in the traditional tourism, the tourists only hurried in going to different places, but now they would like to prefer the ways such as Time Share, Holiday Leisure and Outdoor Challenge. If the enterprise is familiar with this trend, it must enter into these areas beforehand.

 Thirdly, there should be professional evaluation before entering the trade. What the tourism real estate needs is not traditional real estate talents or the transferred tourism talents. What it need most is new teams for planning, promotion and management. For example, the regionalism is very obvious in traditional real estate. Most owners of the properties in Changhewan are local Beijing citizens, especially those working in Xizhimen or Zhongguancun. The websites and ads have to face these people, and it is not realistic to promote in Guangzhou or Japan. However, the tourism property has to promote to the people all over the world, instead it might not stress the promotion in local areas.

Fourthly, the investment in the tourism real estate is strategic. Strictly speaking, we are making strategies rather than doing projects. Unlike the Changhewan Project in Beijing which can gain profit in three years, when Zhongkun put the investment in Hongcun, it has to consider the return term of 5-7 years, while the investment in Kizilsu Kirgiz Autonomous Prefecture, Ka Shi, Aksu, Hotan and Bayin'gholin Mongol Autonomous Prefecture of South Xinjiang might be drawn back in 10 years. However, we can gain profits in these projects while putting investment in them. As the time passes, the profit will ascend in direct proportion. Taking the investment in the four areas of South Xinjiang as an example, the total investment in 5 years is 0.5 –1 billion yuan, mostly on the construction and promotion of scenic spots and hotels. However, by the year of 2008, the estimated tourists in South Xinjiang will reach 300 million. If the average tour time of each tourist is 3-5 days, and the ticket price is 500 yuan, then we will gain a ticket income about 1.5 billion yuan, and a profit of 0.5 billion yuan earned by hotels, traffic, outdoor sports. In this way, the investment of 1-1.5 billion yuan will definitely be drawn back in the later 40 years. The new investment must be put into the maintaining of the scenic spots, and the promotion of the hotels and resorts. Therefore, tourism real estate calls for evergreen industries, instead of those of short lives.

The contribution made by tourism estate to the society is more than that by tourism or real estate. The social influence and the change of value caused by it add along with time. It covers various of trades, provides many employment opportunities, gives impetus to many other industries, and brings large tax income with relatively small risk, which is a trade making big profits with a small capital. However, the tourism real estate can’t drop into a vicious circle in which the main aim is to gain more lands. If so, the tourism real estate will lose its charm. As for Zhongkun Group, we have never intended to play the leading role in this trade. There are many factors hard to handle in the trade of real estate. But when combining with the traded of tourism, we have gained some experience at an early time, have occupied a place in some areas and have had the right to state our own opinions. At present, we own and manage many projects. In the Huangshan scenic area, we have ancient villages such as Hongcun, the world cultural heritage, Guan Lu, and Nan Ping, as well as the Qishuhu International Resorts. In Beijing, we have the projects in Mentougou, mainly about the protection of ancient villages and the development of Time Share and Archeology Tourism. In South Xinjiang, we have 50 years’ managing right in the scenic areas covering 700 thousand square kilometers. In Kyrgyz Republic, we have an 800- hectare resort base in the world natural heritage, Ysyk-Kol. The power of developing will lead to a unique position for Zhongkun Group both in the trade of real estate and of tourism in China and even in the world. So we wholeheartedly wish a rapid and healthy development in China’s tourism real estate, which will provide us with a favorable circumstance for greater achievements!