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Property management gaining momentum

By Wang Ying in Shanghai | China Daily | Updated: 2019-08-16 10:20

Employees from a property management company participate in a maintenance competition in Chongqing. [Photo/China News Service]

Slowing offtake and tightening policies prompt real estate firms to consider new growth avenues

Real estate developers from China are shifting their focus to property management, which is tipped to reach a market size of 1 trillion yuan ($141.9 billion) in five to 10 years, even as low sales, crimped financing options and tightening policies continue to plague the sector, industry experts said.

"We see property management as a blue economy with market value in excess of 1 trillion yuan in the next five to 10 years and we expect over 100 companies in the sector to be listed in the coming decade," said Ye Mingjie, vice-president of Shimao Group, a diversified real estate company.

Last week, Shimao Group said it was upgrading and re-christening its property management unit to Shimao Service, ahead of a potential listing in 2021.

"We are looking at having an initial public offering in 2021. At present we have 100 million square meters of property under our management and the size will double to 200 million sq m by 2020, and further soar to 300 million sq m by 2021. We believe that would be an opportune size to have ahead of the public offering," said Jason Hui, vice-chairman and president of Shimao Group.

In Hui's opinion, managing 300 million sq m of property means Shimao can provide services to about 3 million households or up to 10 million people by 2021.

Property sales had declined across China during the three months to July, both in terms of newly built and pre-owned homes, largely due to dwindling credit options and tightening policies, according to the Shanghai-based E-house China Research and Development Institution.

"Sales will continue to be the focus for property developers for a considerable length of time, but when it comes to large-scale property sales in terms of square meters and value, there is little scope for further improvement," said Ding Zuyu, CEO of E-House (China) Enterprise Holdings Ltd.

According to Ding, nearly 1.7 billion sq m of property were traded last year, for a total value of about 15 trillion yuan.

"In contrast to the limited growth potential for property sales, property management grew steadily year-on-year with total property space expected to exceed 30 billion sq m by the end of this year. A large majority of this would be operated by specialized property management companies," said Ding.

There is also limited growth potential for sales to grow further, considering the huge number of homes sold last year in terms of both gross floor area and value.

Experts said the Chinese real estate sector is entering a new stage in which more homes are being traded in the secondary market. This is especially so in the first-and major second-tier cities, where transactions of pre-owned homes account for more than half of the total trade, with the figures surpassing 80 percent in Beijing and Shanghai.

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