2021 is a year full of opportunities and challenges for the property management industry. In the first half of the year, relevant policy documents were issued at the national level to clarify the future development direction of the property management industry, creating strong conditions for the rapid growth and standardized development of the industry. Property service enterprises continued to accelerate the pace of moving forward, successively landed in the capital market and expanded their scale. At the same time, it is also more rational, firm and in-depth on the road of intelligent and value-added service construction.
In the second half of the year, affected by the real estate market, the focus of the property management industry gradually changed from listing to M & A. Property service enterprises expanded rapidly under the upsurge of M & A, and the industry concentration was further improved. In this context, property service enterprises adhere to the development foundation based on quality service, deeply cultivate the field of value-added services, explore business operation mode, deeply integrate smart technology, constantly consolidate their competitiveness and continue to promote the rapid growth and development of the industry.
policy: support and promote the development of property management industry
Since this year, the state has issued a series of encouraging policies to support and promote the development of the property management industry, and the status of the property management industry in national development has received unprecedented attention. Country garden’s “property + community life service” leverages the blue ocean market
At the beginning of 2021, after the Ministry of housing and urban rural development and other departments jointly issued the notice on strengthening and improving residential property management, provincial and municipal local governments successively issued new regulations and new policies on property management, and the central and local governments have reached a consensus to support and encourage the development of property management industry.
On March 5, 2021, the outline of the 14th five year plan for national economic and social development of the people’s Republic of China and the long-term objectives of 2035 mentioned to accelerate the development of property and other service industries, strengthen property service supervision, and improve the coverage, service quality and standardization of property services.
On May 28, 2021, the Ministry of Commerce and other 12 departments issued the opinions on promoting the construction of a quarter of an hour convenient life circle in the city, which also clearly proposed to encourage qualified property service enterprises to extend to the fields of elderly care, childcare, housekeeping, postal express, front warehouse and so on, promote “property service + life service”, and clearly put forward preferential policies on finance and taxes.
On November 2, 2021, the national development and Reform Commission issued several opinions on promoting the living service industry to make up for shortcomings and improve people’s quality of life, which called for the vigorous development of community convenience services. Promote public service institutions, convenient service facilities and commercial service outlets to radiate all urban and rural communities, and promote the extension of community property to develop basic and embedded services. We will accelerate the development of elderly meal assistance and home care services in big cities, and strive to gradually cover more than 80% of communities within five years.
With the rise of community economy and the increment of service content, property service enterprises will play an important role in promoting the development of life service industry. Under the trend of marketization, continuous innovation of service content and service mode is the main way to enhance the competitiveness of property service enterprises.
scale: frequent M & A cases and increased industry concentration
According to statistics, as of December 10, 2021, 71 M & A transactions in the property management industry have disclosed relevant information this year, involving 33 property enterprises, with a transaction amount of about 33.33 billion yuan. Overall, this year’s M & a market is unprecedented hot, with the overall characteristics of record high transaction volume, frequent large transactions, dominated by enterprises in cities above the main body of M & A, and the valuation of M & A targets returns to rationality. Especially in the second half of the year, the heat of M & a even exceeded that of the property capital market.
Among them, in order to achieve rapid capital turnover, real estate developers have sold their property companies, which is an important reason for the high heat of the M & a market this year, the frequent occurrence of large-scale M & A cases and many high-quality targets. For example, Country Garden Services spent 10 billion yuan, 5.432 billion yuan and 3.3 billion yuan respectively to acquire R & F property, Jiabao service, neighborhood music holdings, etc.
Since the IPO, a large part of the funds raised by property companies have been used for M & A, and the proportion of this fund used by many companies has exceeded 40%. For example, more than 60% of the IPO funds raised by Aoyuan health, jiazhaoye Meimei and ya life group are planned to be used for M & A and investment. In terms of transaction amount, number of transactions and scale of M & A targets, country garden service has become a well deserved “M & a king” in the property management industry in 2021.
M & A accelerates industry integration, and the concentration of the whole market will be significantly improved. On the one hand, large enterprises are still growing at a high speed on the basis of huge management area, and the trend of the strong is always strong; On the other hand, small and medium-sized material enterprises quickly increase their market share by means of mergers and acquisitions, market expansion and other means, and even overtake on corners. With the increase of concentration, another industry trend also follows, that is, the intensification of market differentiation.
Capital: the property sector returns to rationality, and IPO is still the first choice
In 2021, the property management industry experienced a roller coaster development in the capital market. Before July this year, a total of 12 property companies successfully landed in the Hong Kong stock market, and 6 property service companies successfully listed in Hong Kong stock market in July alone. Since then, there has been a gap period of nearly four months for Hong Kong stock property IPO, and the deadlock was not broken until Beijing JIAYE was listed.
From the perspective of the listing cycle, the average time from the first submission of statements to the bell ringing listing of the 12 newly listed property service enterprises in 2021 is more than 40 days longer than that of the listed enterprises in last year. As the new year approaches, many enterprises are still facing the problems of invalid prospectus and secondary submission of forms.
In the context of the split property listing of real estate enterprises, Vanke, which has been watching its change, has also taken action. On November 5, 2021, China Vanke Co.Ltd(000002) announced that it planned to spin off all things cloud and list on the Hong Kong stock exchange. The announcement said that after the listing of everything cloud, it will provide better capital guarantee and capital operation space for its subsequent development, and effectively promote the overall strategic upgrading and sustainable development of the company. According to the prospectus, in 2020, all things cloud achieved an operating revenue of 18.204 billion yuan, a year-on-year increase of 27.36%; At the end of the year, the total area under management was 560 million square meters, half of which came from projects other than Vanke. Based on Vanke’s net profit of 41.515 billion yuan in 2020, omnicloud contributed about 893 million yuan to the parent company.
For the issue of listing, Yu Liang, chairman of Vanke’s board of directors, responded that as a listed company, the funds raised by all things cloud have their own purposes. The reason for choosing to spin off the listing at this time is that everything cloud has become an urban service provider rather than a traditional property service provider. Moreover, in the traditional residential property services, less than half of the newly added area each year has been developed by Vanke, so everything cloud has matured.
In the past two years, property service enterprises have been favored by the capital market, and their capital market performance is particularly eye-catching. Now, with the changes in the capital market situation, the property sector has gradually returned to rationality. In the future, the market space of property service enterprises is huge, and the realization of sustainable development is inseparable from financial support. IPO is still the first choice for enterprise development.
value added services: broadening service boundaries and business areas
The normalization of the epidemic has also greatly changed residents’ living and consumption habits, and the potential of value-added services has been further released. Property service enterprises actively focus on community resources and owners’ assets, continue to carry out new value-added service business, broaden service boundaries and business fields, constantly deepen the community service system, promote from multiple dimensions such as demand, products and channels, develop value-added service products suitable for owners, and promote the high-quality and rapid growth of community life service income.
For example, Longhu intelligent service promotes the implementation of “property service + elderly care service”; Green city service has rich practical experience in the development and operation of pension projects, talent education and training and other fields. Green city service began to comprehensively promote the community inclusive care program; Aoyuan health has established the great health industry development research institute to provide health care services such as smart home care and living for the aged; Poly healthcare investment’s professional layout of health care has gradually formed a trinity pension model of “institutional pension as the core, community-based and home-based”.
According to the statistics of China Index Research Institute, in the first half of 2021, the total value-added service revenue of 44 Hong Kong listed property enterprises reached 35.8 billion yuan, with a year-on-year growth rate of 79.9%, 22.5 percentage points higher than the revenue growth rate; The proportion of value-added service revenue in revenue increased by 5.3 percentage points to 43.1%, and the performance contribution was further improved. Country garden service ranks first in the industry with a value-added service scale of up to 6.39 billion yuan. In terms of growth rate, Jinke service, country garden service and Shimao service led the industry with growth rates of 187.3%, 176.6% and 156.7% respectively.
In addition, property enterprises have gradually jumped out of the traditional business model, explored the emerging management model of “urban service” and further expanded the service boundary. At present, with the continuous promotion of “release, management and service”, property enterprises have gradually undertaken some community governance, public business services and logistics services. The service system is becoming more and more mature and has the basic quality to undertake urban management. At present, when entering the urban service field, property enterprises mainly rely on the integration of “professional service + smart platform + administrative force”, and implement the whole process “management + service + operation” mode for urban public space, public resources and public projects.
Outlook: the development space of the property management industry is still broad
Although the overall property sector in the capital market shows a rational return this year, in contrast to the property industry itself, its basic attributes remain unchanged. Property service enterprises, especially those with large scale, good growth, strong profitability and prominent characteristics, still have long-term investment value.
Looking forward to the future, the development space of the property management industry is still broad, the service boundary is expanding, and the development of enterprises will still accelerate. M & A is still an important means for property service enterprises to continue to expand their scale. The integration of the whole industry will accelerate, the market concentration will further improve, and the market-oriented expansion will also usher in breakthrough progress; The differentiation of the whole capital market will become more and more obvious, and the head enterprises will still be paid attention to and favored by the market; Community value-added services will usher in rapid development. There is a large space for the future growth of commercial operation and urban services. The mature operation mode needs to be further explored by property enterprises; Satisfaction building, brand building and intelligent building will be more concerned by enterprises and become the key to promoting the quality of the industry.
