Dalian Wanda Group said its revenue for 2016 dropped by 13.9%, even as operating income increased 3.4%, as a slowdown in the group’s commercial property business impacted overall performance.
It was the first decline in Wanda’s revenue after years of double-digit growth.
The figures show that the conglomerate, which started out in the housing business, is no longer a real estate company.
According to data posted on its website, the company said its income from commercial property reached 143.02 billion yuan last year, down 25%, compared with income from its film, entertainment, tourism, and sports sectors, which were up 25% to 64.11 billion yuan.
“Wanda’s decision to exit real estate development is not because of its bearish take on China’s real estate industry but primarily based on two reasons,” Wang Jianlin, the billionaire chairman of the company, told an internal company annual meeting on Saturday, according to a Dalian Wanda release published on Monday.
“First, China’s real estate development market is too cyclical, to a degree that is, so to speak, rare around the world.”
The Hong Kong-listed company has been reducing its revenue from commercial property while boosting income from entertainment, tourism, and sports for years.
“I have been in the real estate industry for 28 years…and I have witnessed some 10 rounds of market control, which happens around every approximately three years, with no boom lasting for four years or longer,” Wang said. “The excessive cyclicality of the industry tends to cause instability of cash flows and frequent changes in market expectation.”
He said Wanda can now earn money via its brand reputation, so there’s no need to rely on residential and commercial realty any longer.