Despite a slowdown in China’s domestic real estate market, Chinese property management firms have accelerated their expansion plans with some keen to go public in Hong Kong, prompting analysts to predict a rosy future for the sector.
Greentown Service Group, a property management spin-off from Hangzhou developer Greentown Holdings, is the latest to join the initial public offering (IPO) queue. The company is reportedly seeking to raise up to US$200 million in Hong Kong, with the offer period running from June 28 to July 4.
According to a filing to the Hong Kong stock exchange, the company’s net profit grew 25 per cent in the first three quarters of 2015 compared with the same period in 2014.
“The valuation of property management firms is much better than developers as they are asset-light and their revenues are more stable and not affected by property sales,” said Carol Wu, China property analyst at DBS Vickers.
Greentown Services is set to be the third mainland Chinese property manager to list in Hong Kong since October last year. There are at least two more property management firms that have submitted IPO applications in Hong Kong, including Guangzhou’s Clifford Modern Living Holdings, according to the Hong Kong bourse.
Wu said the potential of China’s property management market is huge because the current management quality is not good, meaning there is a lot of room for improvement in services and opportunity to increase market.
As an example, Colour Life Services, which has acquired a number of small property management firms over the past few years and redeveloped them through its management expertise, has grown to be a provider with the largest coverage of community services in the world in terms of the area of residential properties, she said.
