(Yicai Global) Oct. 17 -- Guangzhou Metro and Xiamen Metro were at the forefront of CNY58.5 billion (USD8.1 billion) of land bought by major subway line operators in the past nine months, as Chinese metro firms have taken to real estate development in the past two years to boost their revenues.

The real estate units of eight metro firms made a list of the top 100 real estate companies by land acquired in the nine months ended Sept. 30, according to data from the China Index Research Institute. Guangzhou Metro and Xiamen Metro ranked 15th and 20th after buying land worth CNY16.5 billion (USD2.3 billion) and CNY12.5 billion (USD1.7 billion), respectively.

Subway developers in major Chinese cities have become increasingly active in the land auction market over the past two years to secure revenue through property development to support their main businesses. Only one metro firm made the list in 2020, versus five last year.

Metro companies have turned to “side businesses” such as real estate development mainly because they would lose money if they were not receiving government subsidies, Chen Xiao, a senior analyst at Zhuge House Hunter, told Yicai Global.

They have a natural advantage in real estate because of financial strength due to their state-owned background and transit-oriented development model, which is more difficult for ordinary property developers to achieve, Chen added.

Shenzhen Metro Property Management and Development, a wholly-owned unit of Shenzhen Metro Group, owns the development rights to 21 projects along its lines, covering an area of about 12.6 million square meters. With total sales of CNY17.5 billion in the first eight months, it ranked second among Shenzhen's top 20 real estate firms, surpassing property giant China Vanke, which sold properties worth CNY10 billion in Shenzhen in the period, per CIRI data.

Revenue at Shenzhen Metro was CNY16.4 billion last year, CNY9.6 billion (USD1.3 billion) of which came from real estate-related business, accounting for 58 percent of the total, the firm's earnings report showed. Net profit was CNY6.7 billion. Income from its metro operations was just CNY3.9 billion, equal to 24 percent of the total, and a corresponding net loss of more than CNY4.1 billion.

The income from Shenzhen Metro Property Management and Development and profit from commercial operations and rail-affiliate resources are used to support the building and running of the city’s metro, thereby easing the financial burden on the government, according to Shenzhen Metro's official website.

Editors: Tang Shihua, Futura Costaglione