ACQUISITIONS

China's top property manager looks for takeover target in HK

Mainland's market leader eyes players suffering from profit squeeze

PUBLISHED : Wednesday, 11 March, 2015, 4:00am
UPDATED : Wednesday, 11 March, 2015, 4:00am

Colour Life Services Group, the mainland's top property management firm, is seeking acquisition opportunities in Hong Kong, company chairman Pan Jun said.

The company, which is listed in Hong Kong, has a presence in 109 mainland cities, managing 136.4 million sq metres of residential space at the end of last year.

It made its first overseas foray in November, when it acquired 68 per cent of Steadlink Asset Management in Singapore for HK$6.6 million. Steadlink manages 703,000 sq metres of residential property in Singapore.

Colour Life was in talks with other Singaporean property managers about possible acquisitions, Pan said.

"Apart from Singapore, we are also looking for a target in Hong Kong," he told the South China Morning Post. "Hong Kong's property managers are suffering a fall in profit margins because of the rise in labour costs. Some small and medium-sized players are pulling back businesses or being acquired by others.

"We think our model can help them tackle current challenges - probably their best option."

Pan said he could take Colour Life's mobile-app-based value-added services abroad to meet all kinds of client demands following satisfactory trials on the mainland last year.

Singapore and Hong Kong suited its models best due to the high population density in communities behind walls and gates, he said.

However, Stephen Chui, DTZ's head of property and facilities management in Hong Kong, warned of high asking prices from the city's property managers, despite thin profit margins.

"He'd better wait for a couple of years," Chui said.

Pan said he was not in a rush, just thinking ahead to stay on top of the competition.

He started rapidly expanding the property management business a few years ago, not in the traditional way but by using big data to analyse residents' demands and generate profits. At that time, most mainland developers were still enjoying a boom and shrugging off warnings about challenges ahead.

In the next few years, restructuring will be the key word for developers, while Pan will step up his efforts to increase Colour Life's market share, which is less than 1 per cent despite being the biggest property manager.

"Of course, our priority is still our home market," Pan said. "But you need to think about the next five steps, like playing chess."

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