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1. The industry scale continues to expand, market concentration increases, and the head effect is significant

Figure: Property Services from 2018 to 2021 Changes in management area, contract area and market share of the top 100 enterprises

Data source: Zhongzhi Data CREIS Property Edition (click to try)

The property management industry has ushered in a stage of rapid expansion and development in recent years. In 2021, the average management area of ​​the top 100 companies reached 56.93 million square meters, a year-on-year increase of 16.69%, which was 5.51 percentage points higher than the national commercial housing completion area growth rate (11.18%) during the same period. The contracted area increased to 76.84 million square meters, which is nearly 20 million square meters higher than the managed area, laying the foundation for future growth. The market share increased to 52.31%, an increase of 2.6 percentage points from the previous year.

Left picture: 2019-2021 TOP10 management area and market share

Right picture: 2019-2021 TOP10 and top 100 companies growth rate comparison

Data source: Middle finger data CREIS Property Edition (click to try)

Top 10 enterprise management areas in 2021 The average area is 355 million square meters, which is 6.2 times the average of the top 100 companies. The market share has increased to 12.84%, and the head effect is prominent. In terms of growth rate, the TOP10 companies still achieved a year-on-year growth rate of 34.23% on such a high base, which was 17.54 percentage points higher than the year-on-year growth rate of the top 100 companies.

2. The style of the M&A market has changed, focusing on quality, strategy, and more prudence.

Since 2022, the M&A market has continued. As of June 29, 2022, according to incomplete statistics, there were nearly 20 publicly disclosed merger and acquisition cases in the industry (excluding cases of abandonment or termination of acquisitions), involving a transaction amount of 8 billion yuan. In the first half of 2021, more than 40 mergers and acquisitions were initiated in the industry, involving more than 15 billion yuan in mergers and acquisitions.

Table: Some merger and acquisition cases in the property management industry in the first half of 2022 (incomplete statistics)

Data source: middle finger data CREIS Property Edition (click to try)

Specifically, it shows the following characteristics. First, be more cautious in mergers and acquisitions, focusing on target quality, strategic synergy and profitability. Mergers and acquisitions are an important means to rapidly expand scale and enter new formats and diversified businesses. This is the industry consensus. However, mergers and acquisitions also have shortcomings, such as high costs and difficulty in post-investment integration. After experiencing industry mergers and acquisitions in the past year, many companies are still considering how to integrate existing businesses, and the selection of new merger and acquisition targets has become more stringent. They must not only consider the expansion of scale, but also comprehensively consider the target price and business. The pace of mergers and acquisitions has slowed down in terms of synergy, complementarity with layout, post-investment management and long-term profitability. Secondly, state-owned enterprises have taken up the banner of the M&A market and its activity has increased. In the first half of 2021, the M&A market has become very popular, but there are only two participation cases with state-owned enterprise background, and the total transaction consideration is less than 200 million yuan. As of June 29, 2022, a total of nearly 20 mergers and acquisitions have been monitored. Among them, the subjects of 5 mergers and acquisitions are state-owned property companies. The disclosed transaction amount is approximately 4.314 billion yuan, accounting for more than half of the total transaction amount. In addition to Jingcheng Jiaye In addition to the mergers and acquisitions, other cases are also four acquisitions with large transaction amounts in the first half of 2022. In fact, since the liquidity crisis in real estate in the second half of 2021, property companies with state-owned backgrounds have gradually become active in the M&A market. From November to December 2021, Financial Street Property , China Resources Vientiane Lifestyle, and China Merchants Jiyu launched a total of 6 mergers and acquisitions. Although the transaction amount is not large, it has already kicked off the mergers and acquisitions of state-owned enterprises. Third, large-scale mergers and acquisitions decreased, with only two cases exceeding 2 billion yuan. Large-scale transactions will occur frequently in 2021. In addition to the obvious decrease in the number of mergers and acquisitions this year, there are also very few large-scale mergers and acquisitions. Only two mergers and acquisitions exceeding 2 billion have occurred. The initiators of the mergers and acquisitions are Country Garden Services and China Resources Vientiane Life.The possible reason is that due to the real estate liquidity crisis, property companies, especially private enterprises, are facing liquidity pressure in large-scale mergers and acquisitions. According to the 2021 annual reports of listed companies, the listed companies with the highest cash and cash equivalents are China Resources Vientiane Lifestyle and Country Garden Services. It can be seen that cash flow still has a certain impact on mergers and acquisitions.

3. Related parties are still an important support for scale, but the long-term blood transfusion ability is weakening.

Although the liquidity crisis in the real estate market has hit the industry development, at present, the project supply of real estate related parties is still composed of the area under management of property companies. important cornerstone.

On the one hand, more than half of the management area of ​​many property service companies comes from brother development companies, occupying an important and basic position. As of December 31, 2021, the proportion of the area under management of Sunac services, China Resources Vientiane Life, Jiayuan services, Sino-Ocean services and other companies from related development companies still remains at more than 50%, but this proportion has downward trend.

Figure: The composition of the management area of ​​some of the top 100 companies in 2020-2021

Data source: middle finger data CREIS Property Edition (click to try)

On the other hand, judging from the real estate sales area data, the sales of the top 100 real estate development companies in 2021 The average area value increased by 1.6% year-on-year. These sales areas can still support the steady growth of the scale of related property companies in the next 2-3 years. In 2021, the sales area of ​​ Sunac China and China Overseas Real Estate exceeded 20 million square meters, and has exceeded 10 million square meters for many consecutive years, providing a strong guarantee for the stable growth of Sunac Services and China Overseas Property Management area. As of December 31, 2021, Poly Property’s contract management area from Poly Development Holding Group was approximately 279.0 million square meters, a year-on-year increase of approximately 38.8 million square meters.

Figure: Sales area of ​​some of the top 100 developers from 2019 to 2021

Data source: middle finger data CREIS Property Edition (click to try)

But in the long term, the blood transfusion ability of real estate related parties will weaken. Among the new areas under management of property companies, the proportion of projects from third parties has a clear upward trend. Driven by mergers and acquisitions and market expansion, the independence of companies such as Times Neighborhood, Shimao Services , Xuhui Yongsheng Services, and Country Garden Services has significantly improved. The proportion of projects under management from third parties in the newly added management area in 2021 Both exceed 80%, while project supply from related real estate companies only accounts for a small proportion.

Figure: The composition of new areas under management of some listed property companies in 2021

Data source: Zhongzhi Data CREIS Property Edition (click to try)

4, independent market expansion will become the core competitiveness, and the Zhongzhi Property Database helps precise external expansion

M&A Although it can expand scale efficiently, the cost is high and integration is difficult. The blood transfusion effect of real estate related parties is inevitably unsustainable and cannot be over-relied. Therefore, independent market expansion is the core competitive advantage of the long-term development of property companies. At present, most property companies have set up specialized market development teams to pay attention to market bidding information, communicate and intervene in advance, win bids for third-party projects, and achieve remarkable results in independent market expansion. Jinke Services will increase its external management area by approximately 31.4 million square meters in 2021, and has successfully settled in more than 10 key schools including Hunan Normal University, Central South University, etc. to provide logistics services, and has obtained logistics services from Sichuan, Chongqing, Jiangxi, etc. Multiple urban projects have achieved new breakthroughs in the expansion of management formats.

Figure: Newly expanded management area of ​​some listed companies in 2021 (excluding mergers and acquisitions)

Data source: middle finger data CREIS Property Edition (click to try)

Property companies usually face the following problems in the process of market expansion: First, There is a large amount of public information in the market, and it is impossible to sort out demand information in a timely and effective manner; secondly, how to grasp other channels for obtaining business opportunities in addition to third-party bidding; thirdly, how to track and comparatively analyze the dynamics of competing companies to seize the opportunity in market layout? In response to the above problems, Zhongzhi Research Institute has specially created Zhongzhi Data CREIS·Property Edition to help enterprises make accurate investment and development and empower them to make scientific decisions.

Picture: Zhongzhi Data CREIS·Property Edition Product Functions

• New projects: comprehensively includes land bidding, auction, and agreement transfer projects, covering a variety of "residential + non-residential" property types. Provide multi-dimensional new land project information, including development companies (with or without property companies), land properties, project locations, planned construction area, etc.
• Contract expiry projects: comprehensively monitors property management projects whose service contracts are about to expire, and prompts the contract expiration time. Covering more than 400,000+ existing projects in major cities across the country, it enables multi-dimensional screening on delivery time, property companies, construction area, property fees, and property types.
• Bidding projects: provides nationwide property service enterprise bidding information, involving important data such as project type, budget amount, bidding deadline and contact information. Collects historical bid winning data for property bidding projects to help companies intervene in proposed bidding projects in advance.