This thesis examines the motivations behind Wanhuilou, the first affordable housing development to be initiated, constructed, and subsidized by a private developer–China Vanke. This case presents a pioneering firm and a radical project, as China Vanke is the first private real estate developer to build affordable housing without a land subsidy from a government-sponsored program. An innovative design, high standards for quality, and arrangement of amenities further distinguish Wanhuilou from China’s other low-income housing. Moreover, China Vanke initiated this project in the city of Guangzhou, one of China’s most expensive land and housing markets. Given Wanhuilou’s extremely anomalous nature, this thesis aims to understand why a private developer would embark on such a project.

This research is important because it examines a potential solution to a critical problem, China’s affordable housing shortage. By exploring different behavioral models as possible explanations for China Vanke’s motivations, my analysis reveals the particular elements that helped China Vanke take on this project. This thesis analyses the research question through four different hypotheses, testing if and how the market, national policy, local political economy, and corporate social responsibility can explain China Vanke’s decision to build Wanhuilou. While this examination suggests that corporate social responsibility builds the strongest case for China Vanke’s motivations, it also shows the interrelationships of these behavioral models. In fact, strategies from other models could complement China Vanke’s current approach-although the firm’s innovation is not enough to make Wanhuilou a replicable business model, a structural reform of housing, with help from the financial market and government policy, could potentially make Wanhuilou a sustainable enterprise.