(Yicai Global) July 21 -- As shopping malls reach saturation point in first-tier cities, commercial real estate is starting to extrude its tentacles out into community businesses.

Although consumption of community business accounts for more than 60 percent of overall consumption, it is still a new business for the domestic commercial real estate market.

"Community businesses mainly serve the daily lives of surrounding residents. What we must do is to create more services within a limited space to satisfy our neighbors' daily needs, and provide residents with a one-stop service experience," Ma Li, founder and general manager of the Shanghai-based Hanli Asset Management Co., told Yicai Global.

Community business is a retail business form with local residents as the main service target, which seeks to provide goods and services for their daily needs. "Profits of community business are not high, but it is important to dig out customer needs. As they come more frequently, this will lift profit margins," Ma said.

Wanyou Market, a community business set amid Shanghai's riverfront Lujiazui area, accommodates a lot of services in daily life. On a visit to the venue, Yicai Global found that the vegetable market on the ground floor was built to the standards of current vegetable markets in Shanghai now in their third-generation since the demise of the planned economy. A decorative profusion of quaint snack bars nestles around the market along adjacent lanes.

The shared space on the second floor comprises a central kitchen, children's education center, barber shop and gym. Each business has its own independent space, with all businesses sharing a large common space in the center.

Compared to other community businesses, the market's miscellany of services lures more residents and thus indirectly brings in more customers.

"We have staged a lot of community activities in this large space. For example, we help children in the community to throw a birthday party." The central area can be shared, which can make more efficient use of space, Ma said.

However, although the community business brims with potential, because profits are low, and positioning insufficiently clear, the current stage of development of community businesses is unimpressive. Wanyou Market serves as an apt example -- though profitable, its profit margin is not high.

"Because of low profit margins, long investment cycles, and unclear positioning, there are fewer successful cases of community businesses," said a businessman engaged in commercial real estate.

"Our main profits come in two ways. One is from rent premiums. The other is that we make investment in many catering and other businesses. We can even make money in our own catering businesses," Ma said.

However, achieving greater growth still demands a certain scale, Ma said, adding that at present, fewer than 10 Wanyou markets have opened. It is very slow to open more stores at this early stage mainly because it is still exploring and gaining more experience. In future, the company will step up the pace of opening new stores, and will resort to partnerships and other means of exporting its management.

"We can only achieve more profit with scale. In the future, we can collect data from members and realize O2O (online-to-offline) through member data. At present, we have cooperated with JD.com Inc. and nearby residents can now order online. But we still attach importance to the offline experience, because shopping can be fun sometimes. Shopping in such a clean and comfortable environment can bring happiness to residents," Ma said.

"Next, we will open wider for investment to look for more partners. We hope to quickly replicate our community business and achieve progress in growth," Ma added.