Property agents under pressure as tech giants Alibaba and JD.com muscle in on home-buying and rental markets
‘Internet companies are penetrating every aspect of the business; it is an inevitable trend, so we must react to it, and embrace it,’ says chief executive for southern China at property agency Centaline
As Chinese e-commerce giants Alibaba and JD.com expand their activities into real estate by building online platfoms for property marketing, sales and rental, traditional property agents are starting to feel the pressure.
Although property agents still have a strong place in the market, they must now find new ways to innovate, according to industry players and analysts.
“They [Alibaba and JD.com] are certainly a threat,” said Andy Lee Yiu-chi, chief executive of Centaline Property Agency for southern China.
“Internet companies are penetrating every aspect of the business; it is an inevitable trend, so we must react to it, and embrace it.”
The e-commerce titans are expanding into the property arena aggressively.
Alipay, for example, China’s biggest mobile payment platform owned by Alibaba, started a new home rental service in October in eight cities, whereby customers with good credit ratings can rent properties “deposit free” using its app.
Meanwhile, JD.com is luring property developers to use its services by providing them with big data-based solutions such inventory management. It said 82 developers had posted projects on its platform.
As part of the central government’s call to bolster the rental market, Alibaba and JD.com are now even helping Hangzhou and Beijing build their own regulatory platforms for rental homes, which means they can gather comprehensive data of available property in the cities.
“Consumer habits and payment methods are changing, property agents must quickly transform themselves to adapt to new [types of] demand,” said Yan Yuejin, research director at E-House China, a real estate consultancy. “Platforms such as Alibaba and JD.com can easily attract huge traffic.”
According to Lee, Centaline has already been piloting some value-added services, leveraging the company’s long-established database, market sensitivity, and professional knowledge to provide suggestions to developers about how to position and design new residential and commercial property projects aimed at target groups.
The agency has also started posting its own property listings on various e-commerce platforms to test the market.
Yan said the biggest change the e-commerce giants had brought to the real estate sector was the smashing of the boundary with retailing.
“Online shoppers can now participate in home transactions and this will generate a lot of new demand,” he said.
Meanwhile, the creation of a credit analysis system would improve efficiency in buying and selling and make it possible to provide further services, such as loans, to customers with good track records, Yan added.
However, Lee said traditional businesses still had advantages in the primary market.
“Property transactions can be complicated processes, which present many unexpected issues such as property rights disputes, delays in delivery and price changes, where personal services are needed,” Lee said.
Most buyers also prefer visiting real estate projects themselves, Lee added because of the big amounts of money involved, very often the biggest investments any individual will ever make.
Alibaba owns the South China Morning Post.