The drunkard's intention is not the wine. Greenland, which has been rapidly conducting capital operations and overseas expansion, has now extended its reach into the subway infrastructure sector. Yesterday, Greenland Subway Investment Development Company was officially established, and Zhang Yuliang, Chairman and President of Greenland Group, made clear that Greenland's subway development model will adopt "rail engineering + regional functions" and will determine the first batch of projects in the second half of the year. Industry insiders said that although integrated subway development can bring Greenland benefits including lower financing costs and long-term investment returns, the difficulty of developing properties above subway stations and the increasing difficulty of land acquisition as the land market system continues to improve are problems Greenland's subway business will need to face in the future.

Greenland disclosed that the so-called "rail engineering + regional functions" means that, with land transfers along the route as part of the repurchase conditions, Greenland will intervene early to participate in the comprehensive functional development of areas along the subway, leverage Greenland's strengths, and build subway-over-station urban complexes and supporting service facilities integrating commercial, office, hotel and other functions. Greenland will lead strategic partners to form a consortium as the main body for investment and construction of rail engineering, undertaking functions such as project funding, planning and design, engineering construction, and equipment operation, and will be directly supervised or entrusted for supervision by relevant government departments. After the project is completed, the relevant rights will be redeemed by government departments in various ways according to different circumstances.

In the view of Chen Baocun, dean of the Yixin Urban and Industrial Research Institute, Greenland's shift to subway investment is not aimed at subway construction itself, but at investment in properties above stations. "First, properties along subway lines have become highly sought after by real estate companies due to convenient transportation, and by investing in the early construction of subways, Greenland has obtained development rights for properties above stations, thereby ensuring the location advantage of its projects. Second, properties above subway stations are mostly commercial, office and other property types. If Greenland holds and operates them later, they can also bring Greenland a long-term source of income."

In addition to development rights for properties above stations, according to a person familiar with the matter, compared with financing for real estate projects, financing costs for infrastructure such as subways are lower, single financing amounts are larger, and such projects are encouraged by the government, with "loan interest rates basically half as much." Amid generally tightening credit for real estate, this business extension has in effect added a new financing channel for Greenland.

However, the "subway + property" development model is not without risks. A marketing head of a real estate company that once managed a property above a subway station in a first-tier city revealed that the internal structure of the subway development model Greenland is about to enter is extremely complex, consisting from bottom to top of foundations, subway depots, mezzanine car parks, and residential floors. All property projects must wait until subway construction is completed before work can begin, so the development cycle is very long, and the corresponding payback period will also be relatively long. Even if offset by lower infrastructure financing costs, subway construction itself is very difficult, and property projects also need to ensure effective and safe connection with the subway. Exit planning, floor slab shock absorption, and noise reduction all pose tests for developers. Such a situation once occurred at Beijing Investment Yintai, which focuses on developing properties above stations: since returning to the Beijing market in 2009, although Beijing Investment Yintai repeatedly acquired above-station plots, its profit margin was continuously dragged down due to long development cycles.

"More importantly, in the past, most developers of properties above stations were local state-owned enterprises, which obtained exclusive plots through monopoly advantages." Industry insiders pointed out that as the land market's public bidding, auction and listing system becomes more complete, how Greenland's subway business can effectively acquire the needed plots, especially in markets outside Shanghai, will also be an issue it needs to consider.