Colour Life’s Pan Jun says huge demand exists for community services in smaller cities
China’s largest property management firm sees net interim profit decline by 5.2pc to 73.5 million yuan
Colour Life Services Group, China’s largest property management firm by scale, says value-added community services have huge market potential in the country’s thousands of small cities.
The comment came after its parent, Shenzhen-based property developer Fantasia Holdings, acquired Wanda Group’s property management unit, an operation that covers 64 million square metres of projects in 86 cities, for about 1.2 billion yuan on August 1.
“We were not the highest bidder, so the successful acquisition demonstrates our leading position in the industry,” said Pan Jun, the chairman of Fantasia and Colour Life on Thursday.
Pan said as the firm has expanded into smaller cities through acquisition, he has found a growing demand for its community services.
“There is very limited choice of services, so we can have a big role there.
“Online shopping is also more popular in China’s third- and fourth-tier cities,” he said.
Colour Life has developed its own ecosystem combining resources that including website, mobile-app development and traditional retail outlets, in a bid to satisfy a variety of client needs, from maintenance, payment settlement, and online shopping, to wealth management.
Pan said it would take around two years to complete the integration of the Wanda unit within its 360 million square metres of floor space already under management.
Colour Life will charge consultancy fees on managing Wanda’s apartments, initially, so the income contribution would be limited, he said.
On Wanda’s future property projects, Pan said the group plans to be the property manager but that the two sides are yet to sign any binding agreements.
Colour Life saw its net profit decline by 5.2 per cent to 73.5 million yuan in the first half, despite a 107 per cent increase in revenue.
In a statement, the company blamed the performance on the costs involved in taking on projects owned by Kaiyuan International, the property management firm it bought in 2015, which has lower margins on management fees.
Tony Li, an analyst at China Galaxy International Securities, said Colour Life needs to boost the performance of its core mobile application platform “Caizhiyun”, as its current active rate is only around half of its total registered users.
“The business model is new. It takes time to build a user base and find revenue resources for its value-added services,” he said.
Meanwhile, Fantasia’s net profit rose 28 per cent during the period to 266 million yuan, thanks to a strong home sales.