Property agencies pin hopes on alliances, internet finance as sales slump

Firms in property service sector pin hopes on tie-ups and online finance while shutting outlets

PUBLISHED : Tuesday, 22 July, 2014, 3:07pm
UPDATED : Wednesday, 23 July, 2014, 1:43am

The downturn in the mainland's real estate market and the rising popularity of internet finance are driving a shake-up in the property service industry, in which firms are closing unprofitable shops and seeking alliances for new businesses.

E-House (China) announced last week the launch of its real estate financial services platform, through which the property consultancy and partners including Sina would raise funds online to finance homebuyers.

The move came a few days after E-House's main rival and the mainland's largest real estate website operator, Soufun, teamed up with the country's No1 and No3 brokers of new homes - Worldunion and Hopefluent - to develop internet and real estate financing services, as well as cooperating in traditional business lines including advertising, home listing services and consultancy.

Meanwhile, Century 21 Real Estate, the world's largest franchisor of residential real estate agencies, confirmed in an e-mailed statement on Monday it had pulled out of Shenzhen as part of its survival strategy in the cooling housing market.

"Property developers are going through rapid consolidation. I believe the consolidation among property agencies will be even faster," Chen Jinsong, chairman of Shenzhen-based Worldunion, told reporters when announcing the firm's tie-up with Soufun.

Soufun's deal came after months of disputes over service charges with property agencies selling used homes, which ended last month with a price discount costing the website operator at least 500 million yuan (HK$629 million) and the evaporation of almost a third of the market value of its American depositary receipts in just a few weeks.

Its main clients, including Centaline China, Homelink, 5i5j and Maitian, had complained Soufun wanted to raise charges at a time when the agencies were all suffering from sluggish transaction volume.

Industry observers said Soufun would possibly continue to pursue partnerships with key brokers of used homes, as its agreements with Worldunion and Hopefluent were not exclusive.

Worldunion has been expanding aggressively to meet a strong demand for shot-term loans averaging 100,000 yuan from young homebuyers and aims for tenfold growth in such loans to 1.5 billion yuan this year as it widens its revenue sources, Chen told the South China Morning Post in an interview earlier.

Ding Zuyu, co-president of E-House (China), said: "Everyone is looking for a new business model to perfectly integrate the three keywords of internet, property and finance."

Data from Century 21 showed secondary home sales in Beijing fell 53.5 per cent in the first half of this year from a year earlier to 44,000 units.

The National Bureau of Statistics last week said sales revenues for new homes fell 9.2 per cent in the first six months from a year earlier to 2.6 trillion yuan.

"All the agencies combined closed about 20 per cent of their outlets in the first half of this year," Century 21 said.