Hong Kong property

After breakneck expansion, new real estate agency China's Qfang wants to optimise strategy

PUBLISHED : Tuesday, 24 November, 2015, 10:28am
UPDATED : Tuesday, 24 November, 2015, 12:22pm

After a few years of breakneck expansion, pioneering real estate agency Qfang needs to pause and optimise its strategy before picking up the pace again soon, its founder Liang Wenhua said.

Qfang is built on a traditional agency Shihua Real Estate Company Liang founded in Shenzhen in 2000. But it is different -- as now is the internet era.

“Our dream is to activate all real estate in the global village through our platform,” said Liang, who started working in the property industry since 1992.

Last Friday, Qfang signed a strategic collaboration agreement to sell homes built by Dubai-based luxury developer Damac Properties.

Qfang has also been branching out quickly in Hong Kong since March, led by a team of former executives from Midland Holdings.

Over the past year, Liang aggressively grew the number of offline outlets to over 1,200 across 19 Chinese cities from about 200. On the other hand, he has been trying to establish an open online platform to connect home buyers, sellers and agents.

That is a race Qfang and its rivals, including fangdd, Soufun Holdings and Homelink, must win to define their industry position before the dust settles in the next three to five years. Meanwhile, challengers can spring out any time, armed with better ideas.

They have a consensus that the old way of broking property deals no longer works and that what matters most is to deliver best services to clients, as there is little chance to make money from the information gap as they did in the past.

But how? Each has a different strategy. Soufun Holdings, China’s biggest real estate website, is now building teams offline. Homelink is doing the opposite, as it has long been the largest real estate agency in Beijing and has been acquiring small rivals in Shanghai and other cities in recent months, while also doubling efforts to improve its online platform.

“It’s hard to say which model will become successful,” said He Yinyu, chief executive officer of Leju, also an online-to-offline real estate service provider in China.

“It’s worth paying attention as to what impact the internet will bring to existing home transaction platforms,” he told a recent forum. “So far, it remains that the most important thing is still the sources of existing homes.”

That means, agencies, old or new, need to build up offline teams to collect and increase the listings of existing homes on their outlets or online platforms.

“It is a very tough job (to build up database),” Qfang’s Liang told a forum in Macau. “We have been doing it for four years, putting a lot of effort but unable to generate a penny out of it yet.”

His company’s database now covers 40 cities, 55 million existing homes. Apart from ownership, flat structure and interiors, the information also includes the surrounding area such as schools, hospital, transportation and shopping.

“This is a meaningful thing to do, but will not necessarily make money,” Liang added.

That means he needs to raise funds to support future expansion. In March, a Shenzhen-listed real estate agency Worldunion, which mainly helps developers selling new homes, announced it plans to invest 420 million yuan for a 15 per cent stake.

“We’ve been expanding very fast. Now we need to think and optimise (what we do),” Liang said. “Of course, we will keep developing fast in the future. But it’s better if we can pause and think for a while and then pick up the pace again.”