Link Group

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- Vision of the company

LINK Group is willing to become one of the leading real estate investment funds in Shanghai. They want to contribute to the recent developments of the real estate market in China by serving as a link between promising real estate investment projects and anyone willing to invest. They believe that by working on new residential and commercial spaces they will have a positive influence on the community as well.

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Link Group Projects

1.2.1) Link Investment

The first major project of Link Investment to set off is called Link International House. The aim is to create a building where up to 500 young foreign students and professionals can live together and thus build friendship and partnerships. In order to achieve this goal, the talents within Link Investment will attract investors and gain money from crowd funding platforms.

1.2.2) Link Residential

The aim is to provide housing for the general public. Link Group invests, renovates and rents out hundreds of apartments to young professionals from all over the world. Link Residential project tries to connect international people through shared accommodation.

1.2.3) Link Commercial

Link commercial is focused on young professionals and businesses. This channel helps entrepreneurs to connect with other interesting and promising companies, individuals and entrepreneurs. Namely, Link rents out shared office spaces for companies providing them with a networking and bringing them a link with different companies, individuals and entrepreneurs thanks to a co-working environment.

Link Group believes that the common/shared space in the office is the key factor to exchanging thoughts, ideas, concepts and connections. All this is possible due to the common areas, which are uniquely decorated and once per month host events to stimulate networking and bringing people together to share experiences.[2]

Link Group is developing these three projects within a not very stable real estate market as we could see on the next section.

- Real estate market in China

Chinese real estate market experienced an above-average rise in housing prices due to an increase in demand between 2005 and 2011. The increased demand was largely due to the large growth rates in China, which lead to a bigger middle class and higher living standards. The seemingly genuine increase in demand let to an increase in supply, as investors and government invested in new real estate projects and construction of new cities.

Due to this Boom of construction, the government enacted several policies to prevent the bubble from occurring. Speculative activities are avoided by monitoring capital flows to the capital market and requiring families to pay a high down payment for their second home[3] – real estate sector account for 15 % of Chinese GDP[4]. In mid-2012, house prices started to rebound when the central bank began to expand monetary easing to support growth policies.

However, the sector was far from a full-blown recovery and in August 2014 the market experienced a one-year slump. The housing market steadied in recent months, supported by a barrage of government support measures since last September, including a series of interest rate cuts and lower down payment requirements.

Between 2015 and 2016, financial market has stabilized with low interest rates, and low reserve requirement ratio, and therefore these policies will benefit first-tier[5] cities but are less effective in lower-tier[6] cities since the market is not expected to have a high growth rate, as there still is a massive overhang of unsold homes that will likely discourage new construction into next year[7].

In the other hand, for 2016, student housing has the potential of becoming a significant and established asset class compared to the previous asset class because of the enduring nature of the institutions that its serves. Student housing produces reliable rental income flows which, although derived from short tenancies, is secured by depth and stability of demand (even more in big cities such as Shanghai who holds the biggest percentage of foreign students in China), and often matches by low levels of competing supply. This also makes student housing a natural subject for securitization, increasingly in the form of REITSs[8]. Student housing it is being one of the best performing sectors during the global economic downturn, expanding from $3.4bn investment globally in 2007 to a new high of $7.2bn in 2015[9] on real estate market.

Hence, student housing it is the market niche that Link Group was looking for, so, the entire work will be developed within this specific market as we can see on the following section where we develop deeper the internship work made within Link Group.

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- My contributions and achieved knowledge

- Link Group`s situation on Shanghai’s real estate market

I arrived in this company on 18th January, and since the first day I felt I was already part of this big family. When I started my work in this company, the CEO was changing the internal policies because the old ones that they were using were not as effective as desired and also because the company had suffered from a big employee turnover on the last couple of months. The CEO decided it was time to do some changes within the company and pumped up with new challenges and targets.

To do so, I have been allocated many different tasks. I started with a market research of the real estate market in Shanghai - I was in charge of the data collecting of this field. I looked for our currents competitors on the market: once I collected this information (name of the companies, which percentage of the real estate market they were holding and in which Shanghai district they had their properties)[10] I presented my results to the CEO to update the information that they had and worked with so far.

Collecting this information, I could understand better the real estate business and this has given me a general knowledge on this market. I understood that Link Group`s services on real estate are mostly rent commercial and residential shared flats and that its target market are foreigners living in Shanghai.

- The strategy

With