China's Property
Management Industry
SPOTLIGHT
Savills Research
China Research - 2021
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3
3
China's Property Management Industry
The commercialisation of the property
management industry in China started in
1981 with the incorporation of China’s first
property management company managing
a residential property in Shenzhen. In the
subsequent ten years, residential property
management continued to mature with the
eventual establishment of the Shenzhen Real
Estate Management Bureau in 1985. One
of the first Grade A office buildings to be
professionally managed was the Guangzhou
World Trade Centre in 1992, where it was
co-managed by Savills and Guangzhou Pearl
River Hotel Management.
In the early days of property management
in China, the sector remained immensely
scattered and only basic property
management services were provided. The
China Property Management Association
was eventually established in 2000, with
the first nationwide property management
regulations issued in 2003. As the property
management sector continued to grow, local
governments set standards for the market,
requiring firms to obtain operation licenses
and setting residential property management
fee caps.
The industry started to undergo greater
liberalisation in 2014-2016, with property
managers no longer required to obtain
the national ‘Certified Property Manager’
qualification license and commodity housing
management fees caps removed and instead
set by market forces. In more recent years,
property managers have started providing
value-added services (VAS) to boost
revenues and profit margins. At the same
time, many developers have spun off property
management divisions in separate listings,
with many of them given the mandate to
aggressively expand market share, often
through mergers and acquisitions. The
property management industry is now also
taking on a broader range of property types.
In addition to the more standard commercial
and residential developments, firms are be
contracted for work at schools, hospitals,
airports, sports stadiums and public utilities,
to name just a few.
MARKET BACKGROUND
CONTENTS
Market Background 3
Market Overview 4
Market Consolidation 6
Technology 8
Equities 10
Sustainability In Property 12
Large Contracts Signed 13
Outlook 14
4
Hainan Retail
The property management sector is believed
to be approximately 35 billion sq m by the
end of 2020, according to CRIC, up from 19.3
billion sq m just five years ago with revenues
of RMB1.27 trillion. The biggest 100 property
management companies account for roughly
33% of space under management (11.55 bn
sq m), having consolidated their market
share from 18.1% in 2015. This tremendous
growth can be attributed to the country’s
rapid urbanisation and continued investment
in property development. Meanwhile, a
constant stream of new stock, in addition to
the consolidation of existing market share,
represents significant market opportunities
for managers in the near future.
MANAGER CHANGES
Historically, very few residential
developments changed property managers
after project completion, with low fees
and sign-off requirements from ownership
committees, making it challenging for
firms to secure new profitable engagements
of existing developments. Nevertheless,
according to a survey carried out by CRIC
after the pandemic, around a third of
residential neighbourhoods considered
changing property management companies
as they place increased importance on health,
safety and upkeep. This could prove to be a
considerable opportunity as leading property
managers continue to refine processes, add
services to differentiate themselves and
offer significant value to tenants. It is now
MARKET OVERVIEW
Figure 1: Commodity Housing Starts And Completions
Source National Bureau of Statistics; Savills Research
also easier to change a property manager as
a result of Article 278 of the Civil Code (民
法典) published in May 2020 and enforced
on January 1, 2021. This article states that a
quorum of at least two-thirds of exclusive
units by unit owners and area are required
for owner committee joint decisions, while
employing and removing the property
management service enterprise requires the
consent of just half of the exclusive units by
unit owners and area.
0.0
0.5
1.0
1.5
2.0
2.5
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
billion sq m
New starts Completed
5
China's Property Management Industry
Figure 3: Importance Of Property Management Brand
36%
48%
15%
1%
Essential
Important
Not important
Not considered
Source CRIC; Savills Research
PARENT COMPANY SUPPORT
While the top 100 firms have a 33% share of
the market, the top 10 are believed to have
roughly 11% share, equating to an average
of 387 million sq m. These large property
managers are continuing to build their
market share; data from listed property
managers’ 2019 annual reports show
that the big three players (Poly Property
Services, Country Garden Services and
A-Living) secured 287 million sq m of
additional management contracts of existing
developments in 2019 (equivalent to 60% of
the total) as well as an additional 443 million
sq m in contracts for future projects (56% of
the total).
27 out of the 30 companies listed in Hong
Kong are spun off from developers, with
these managers relying heavily, though
not necessarily exclusively, on their parent
company for future market expansion
opportunities. Almost two-thirds of the
space managed by Country Garden Services
was developed by its parent company, while
64% of space managed by First Service is
related to its parent company, Modern Land.
BRAND ATTRACTION
The leading brands are also likely to
gain traction with contracts for existing
developments. A recent survey by CRIC
indicated that 72% of property owners think
of brand reputation when deciding a property
manager, while 36% indicated that they
would only consider leading companies. A
recent survey by Citi also indicated that two-
thirds of households would be willing to pay
higher management fees, while that figure
goes up to 71% of households when limited to
those located in first-tier cities.
GOVERNMENT SUPPORT
The government is now actively
encouraging further development of the
sector by reducing costs, e.g., additional
VAT deductions (Oct/19-Dec/21) for the
life services industry, of which property
management is a part of, or through
establishing industry standards, improving
transparency, expanding the scope and
scale of the industry and promoting greater
technology adoption and sustainability
within the industry.
FUTURE OPPORTUNITIES
China has a rapidly ageing society, with 12.6%
of the population (176 million) already aged
65 or above by 2019. This figure is expected
to grow to 26% of the population by 2050
(366 million). This represents a significant
challenge for the country, which is now
turning to property managers to marshal
their resources to set up in-home elderly care
services. The property management sector
employs a large workforce and has experience
Figure 2: Top 100 PM Firms Scale And Market Share
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
5
10
15
20
25
30
35
40
2015 2016 2017 2018 2019 2020
billion sqm
Top100 (LHS) Others (LHS) Growth of Top 100 (RHS) Growth of Others (RHS)
Source CRIC; Savills Research
in vetting, training, mobilising and
supervising staff. The property management
sector in Shanghai is reported to employ
close to 900,000 workers, according
to the Shanghai Property Management
Association, equivalent to 7% of the city’s
working population. To attract workers, the
government is also providing subsidies for
training staff and will provide public rental
housing to elderly care service employees.
6
MARKET CONSOLIDATIONS
China's Property Management Industry
2020 was a big year for merger and
acquisitions. Large property managers
actively expanded their market share
through the acquisition of smaller local and
regional peers. Some acquisitions were of
firms managing similar asset classes and
primarily designed to increase business
scale, while others were of firms managing
different asset classes, enabling the acquirer
to expand into new sectors and building
specialisations.
Hong Kong-listed property managers
(pre-2020 IPOs) spent around RMB978
million in the first half of 2020 in
strategic acquisitions. Colour Life, Times
Neighbourhood, Aoyuan Health and S-Enjoy
were particularly aggressive, accounting for
88% of acquisitions during the period. Most
acquisitions focused on increasing scale and
geographic coverage, though there were also
some purchases of more diverse firms such
as lift engineering, security and cleaning
services as property managers look to
improve services provided. The second half
of 2020 saw more acquisitions—Country
Garden Services, for example, acquired an
advertising firm, a food technology company
and environmental protection services.
Residential property management
remains the mainstay for most property
managers, with 95.4% of top 500 property
managers providing some form of
services to residential developments,
according to CRIC. Meanwhile, residential
developments account for 60% of managed
space, equivalent to roughly 8 billion sq
m. Nevertheless, residential property
management fees and collection rates
remain stubbornly low, and managers are
having to expand into more asset types and
more diverse services in order to increase
fees and margins. Initially, this entailed
commercial (office and retail) developments
but are now increasingly including
integrated urban services.
Urban services such as road maintenance,
waterway maintenance, garbage disposal
and landscape maintenance are typically
managed by different departments and
administrative districts, leading to reduced
efficiency and poorer outcomes. Property
managers are very experienced at providing
a range of services, albeit at a different scale
and have the potential to scale up to meet
Figure 5: Average Collection Rates Of Top 100 Property Managers, 2020
Source Savills Research; Citi Research
88%
90%
92%
94%
96%
98%
100%
Hospital School Office Industrial
park
Mall Residential
Figure 4: Property Management Fees By Asset Type And Region, 2019
Source (Savills Research; China Index Academy
0
2
4
6
8
10
12
14
China 1st tier cities 2nd tier cities 3rd & 4th tier
cities
RMB psm pmth
Office Retail Healthcare Public
Industrial Education Residential Other
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China's Property Management Industry
Figure 6: Property Management Business Growth Prospects
Source Savills Research; Citi Research
the needs of the local authorities, bringing
experience from previous engagements and
leveraging technical enhancements and
process innovations. If services are below
what is expected, authorities can then
outsource to a competing property manager.
Huatai Securities estimates that the city
public services sector could be worth
RMB304.4 billion to third-party managers
by 2024, generating an additional 10-20% in
additional revenue. Leading firms, including
Country Garden, Vanke, Poly and China
Merchants, are currently competing in this
space.
With a record 17 property management
companies listing on the Hong Kong
exchange in 2020, an estimated HKD64.8
billion was raised. Listing companies have
allocated approximately two-thirds of funds
raised (HKD 42.4 billion) for strategic
acquisitions to increase scale, coverage
and services. The market is, for this reason
and others, therefore expected to see a
consolidation peak in the next two to three
years.
Customer Journey Map
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8
TECHNOLOGY
China's Property Management Industry
TECH ADOPTION
The appeal of PropTech in the property
management sector is quite clear. Much of
basic property management is relatively
repetitive and labour intensive, so the
application of technology solutions
have the potential to automate and
streamline processes, while also improving
transparency and accountability,
enhancing labour productivity, reducing
costs and improving service quality.
With greater monitoring and operational
efficiencies, there is also the potential
of tracking and enhancing operational
sustainability. Additionally, companies
that have fully-fledged tech programs are
more likely to receive higher stock market
valuations, able to develop incremental
improvements over the long term, integrate
additional projects faster and roll out
new products and services swifter. The
global pandemic has also highlighted the
importance of property management
firms and the role that technology can
play during these challenging times, such
as minimising human contact, creating
touchless experiences and monitoring
of public spaces. 26% of funds raised by
property management firms’ HK IPOs
were earmarked for the development of IT
systems and PropTech solutions to increase
productivity and operational efficiency or to
roll out additional services to residents or
tenants in the form of value-added services
(VAS) platforms.
While technology such as facial recognition
is being installed in a number of residential
areas, not all residents are happy with the
pace of adoption and lack of consultation.
There have been several cases where
systems have had to be removed in response
to residents’ complaints about a lack of
consultation as well as concerns about
improper use of personal data and data
security measures. Hangzhou, China’s tech
hub and home to Alibaba, recently became
the first city in China to draft a municipal
property management regulation that would
make it illegal to demand people to submit
facial and other biometric scans when
entering property compounds. The lesson
here being that all stakeholders should be
consulted and that the costs and benefits
should be weighed up before proceeding.
It is also important that just because it is
technologically possible to do something
does not necessarily mean it should be done.
Value Added Services
Value-added services are a key focus for
many property managers as it has the
possibility of significantly enhancing
revenue streams and potentially boosting
profit margins in the long run if there is
significant take-up from tenants. VAS can
cover a wide range of activities from event
planning, catering, pet sitting, pest control,
housekeeping and laundry. VAS can be
thought of as a lite version of coworking
spaces or serviced apartments, providing
80% of the value for 20% of the cost as well
as potentially being an a la carte option
versus a full package.
One such service that has gained immense
popularity in 2020 is community group
buying, predominantly for FMCG and
fresh food. Online grocers have tried to tap
into neighbourhood consumption demand
over the last few years, but there was stiff
competition from established formats,
such as wet markets, mom-and-pop stores
and chain grocers as well as difficulties
in changing consumer behaviour. The
pandemic, however, accelerated online
adoption, and once consumers tried
platforms, the value and convenience
proposition locked them into a new mode
PropTech has been the buzzword in the industry globally for the last few years. However, adoption has been slow as many players
remain cautious about changing their business models to bring new technologies into the fold. Many products are still in the proof-of-
concept stage, with some large developers cooperating with innovative tech companies to develop built-to-suit products.
9
China's Property Management Industry
of consumption. During the height of the
COVID-19 lockdown in 2020, Nice Tuan
(十荟团) was even designated as an ‘essential
service’ by several provinces and municipal-
level governments as a food and agricultural
products supplier. The main difference
between community group buying and
online supermarkets such as Hema Fresh is
the ability to purchase fresh food in bulk—
often via a single person as an agent—
leading to lower prices for consumers and
better cost-effectiveness for vendors. As
property managers begin to explore services
that they can bundle together and provide
to tenants, cooperation with online grocers
is likely to be a key service that enables close
to daily interactions with tenants. Online
grocers are also more than happy to work
with property managers as the trained staff
of property managers would ensure a better
last-mile delivery experience and after-sales
services compared to individual agents.
VAS platforms not only enable additional
revenue streams for managers but also
increase the number of touchpoints with
tenants, ensuring greater communication,
while also improving trust and the property
managers value proposition to tenants.
The increased interaction and growing
value could also improve management fee
collection rates, which remain stubbornly
low, especially in residential properties,
often below 80%. According to a survey
conducted by Citi Research, more than half
of residents nationwide are in favour of
paying higher management fees for better
services.
ROBOTS/DRONES
While many PropTech solutions are coming
into their own, robotics still has a way to
go before creating true value, at least in a
property management setting. That is not to
say they have no value, but it is particularly
limited and specific at the moment or as
part of a marketing strategy.
Service robot/drones have seen increased
interest in response to COVID-19 and are
already in use in some restaurant and hotel
settings. Service robots were deployed
in hospitals, quarantine hotels, airports,
shopping malls and other public places to
aid frontline service staff and reduce the
chance of viral transmission.
Patrol robot/drones equipped with infrared
cameras can scan the temperature of up
to 10 people within 5 m, and they can also
feed the data to relevant authorities for
centralised management. Robots were also
used to disinfect isolation wards, distribute
food and medication. Robots can also be
developed in more miniature forms to
access locations or carry out actions not
possible for humans. Despite the current
limitations, more investment and advances
are likely in the coming years to support and
enhance the services provided by the human
workforce.
10
EQUITIES
A record 17 Chinese property management
companies went public on the Hong Kong
Exchange in 2020, raising roughly HKD64.8
billion through IPOs. A further eight firms
carried out share allotments raising a further
HKD9.55 billion.
Stock investors are looking very favourably
upon the property management sector’s pros-
pects, with the average PE ratios of the 38 HK-
and Shanghai-listed property management
firms standing at x38 by the end of 2020,
according to CIA, which is even higher than
the average for tech companies (x35). Citi
Research believes that PE ratios for property
management firms will remain high, averaging
21 to 29 over the next two years. In compari-
son, property developers are expected to have
PE ratios of between 5 and 6. The aggressive
valuations are justified by a number of trends,
namely, continued support from the govern-
ment for the expansion and consolidation of
the sector, a large pipeline of new projects
(many already contracted) equivalent to a
32% CAGR from 2020 to 2022, as well as more
than 50% expected in annual growth in profit
from value-added services. Several property
managers have already issued positive profit
alerts in the first quarter of 2021.
Property management firms’ performance
during the COVID-19 lockdown from
mid-January to late-February 2020 earned
widespread praise and recognition. This was
reflected in HK equity market valuations,
with property management company share
prices rising an average of 22% in 2020, while
the overall Hang Seng Index fell by 5%. At
the same time, property management firms
are asset-light and are therefore less prone
to property market swings and cycles than
their parent companies. Additionally, their
revenue streams are more dependable given
the long-term management contracts (typ-
ically three years), while new projects tend
to be contracted ahead of time and revenues
are generally strongly correlated with GFA
under management, giving more confidence
for sustained revenues growth, at least in
the short-to mid-term. As mentioned before,
tenants are now more aware of the value
that property management services bring to
a community, but strong property managers
also add value to the property itself. A survey
carried out by CIA before the pandemic indi-
cated that the price of second-hand property
managed by the top 100 property managers
was 4.21% higher than a similar property in
its surrounding location; similarly, the rental
values of these properties was 4.81% higher.
China's Property Management Industry
Table 3: Publicly Traded Property Management Firms, Market Cap Exceeding HK$10bn, 24 Feb 2021
Source Various Sources; Savills Research
PM Company IPO Date
Change since
trading debut
Change in
2020
Market
capitalisation
(HK$ bn)
Price-to-
Earning Ratio
Country Garden Services Jun-18 424% 101% 196.5 70.2
Evergrande Property Services Dec-20 1% 166.5 82.9
China Resources Mixc Lifestyle Dec-20 29% 100.5 157.8
Sunac Services Nov-20 22% 71.7 127.0
Jinke Smart Services Nov-20 39% 50.3 81.5
A-Living Feb-18 264% 27% 43.0 24.7
Ever Sunshine Lifestyle Dec-18 854% 227% 33.7 85.2
Shimao Services Oct-20 -28% 32.9 44.4
Poly Property Services Dec-19 34% 31% 28.3 36.8
Greentown Service Jul-16 334% 14% 26.0 31.0
KWG Living Oct-20 4% 17. 8 65.8
China Overseas Property Oct-15 282% -19% 16.1 28.3
Powerlong CM Dec-19 146% 153% 15.8 41.9
S Enjoy Service Nov-18 485% 44% 15.1 35.5
Excellence CM Oct-20 -7% 11.5 40.1
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China's Property Management Industry
Figure 9: Oering Price Vs Debut Close Price
Source Various Sources; Savills Research
-30% -20% -10% 0% 10% 20% 30% 40% 50%
A-Living
Kaisa Prosperity
Zhong Ao Home
Ever Sunshine Lifestyle
Riverine China
S Enjoy Service
Powerlong CM
Greentown Service
Languang Justbon
Yincheng Life Service
Aoyuan Healthy Life
Colour Life Services
Poly Property Services
Hevol Services
Clifford M&L
Xinyuan Property Mgmt
First Service
KWG Living
Sino-Ocean Service
Evergrande Property Management
Shimao Services
Jinke Smart Services
Jiayuan Services
Xingye Wulian Service
Excellence CM
Redsun Services
Ye Xing
Sunac Services
CC New Life
Zhenro Services
China Resources Mixc Lifestyle
Financial Street Property
listed in 2020
listed before 2020
Figure 8: Property Managent Market Cap & Trading
volume, 2020
Source Various Sources; Savills Research
0 50 100 150 200 250
Country Garden
Services
Evergrande Property
Management
China Resources Mixc
Lifestyle
Sunac Services
Jinke Smart Services
A-Living
Ever Sunshine
Lifestyle
Shimao Services
Poly Property
Services
Greentown Service
HK$ bn
Figure 7: China Property Management Company
HK IPOs
Source Various Sources; Savills Research
0
2
4
6
8
10
12
14
16
18
2014 2015 2016 2017 2018 2019 2020
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China's Property Management Industry
LARGE CONTRACTS SIGNED
Table 1: Top Managers By Large Contract GFA Signed, 2020
Source Savills Research, Various Sources
Property management firms No. of projects GFA (million sq m)
Sinic Property 57 7.8
S Enjoy 32 5.1
China Railway Real Estate - Savills 9 2.7
Landsea Green Life 8 2.2
Zoina Service 15 2.2
Table 2: One Million sq m Or Larger Deals , 2020
Source Savills Research, Various Sources
PM firm City Project Signatory Property type
GFA
(million sq m)
Guorui Real Estate
Management
Shenzhen
Tiegang
Community
Party Committee of
Tiegang Community,
Gonghe Town, Heshan
City, Jiangmen
Mixed use 2.0
Golte Hangzhou
Geely Automobile
Hangzhou Bay
Plant
Ningbo Hangzhou Bay
New Area Jiyan Hotel
Management
Oce 1.9
S Enjoy Suzhou
Suzhou Lotus
Pond and
Moonlight
Wetland Garden
Suzhou Xiangcheng
Lvlian Property
Management
Oce 1.3
Logan Service Shenzhen
Polyacer Industrial
Centre
Polyacer International Mixed use 1.2
China Railway Real
Estate - Savills
Xiong’an
Rongdong Group
A resettlement
housing and
supporting
facilities
China Railway Real
Estate Group
Mixed use 1.0
Gemdale Property
Management
Dongguan
Golden Town
Industrial Park
Dongguan Jiuhe
Investment
Mixed use 1.0
13
China's Property Management Industry
SUSTAINABILITY
IN PROPERTY
GOVERNMENT TARGETS
Chinese authorities are now getting serious
about tackling the problem, setting a target
in its 13th Five-Year Plan for 50% of all new
buildings constructed by 2020 to be green
buildings. This target has since been raised
to 70% for new buildings constructed by
2022. President Xi also outlined plans for the
country to seek an emission peak before 2030
and net-zero by 2060. In order to achieve
these goals, many more sustainability
measures should be announced in the coming
years.
BUILDING CERTIFICATIONS
China’s local sustainable building
certification is the Green Building
Evaluation Label (GBEL) or “Three Star”, a
voluntary national-rating system in China
administered by the Ministry of Housing
and Urban-Rural Development (MOHURD).
By the end of 2019, there were estimated
to be 19,800 certified projects with a total
GFA of 5 billion sq m. GBEL certification
is dominant as most of the green building
laws and policies refer to GBEL as well
as government subsidy programs. Other
popular certifications in China include LEED
and BREEAM, with 2,714 buildings believed
to have been certified by the former between
2016 and 2020, an increase of 62% compared
to the period of 2010-2015.
All green building certifications look to
minimise the environmental impact of
buildings by requiring an assessment of
the building life cycle, siting and structure
design efficiency, energy, water and materials
efficiency, indoor environmental quality and
operations and maintenance optimisation.
While figures will vary depending upon
asset class, climate, project size, etc.,
many authorities agree that for a minimal
additional investment into building design
and construction, there can be significant
operating cost reductions, while also
generating increased occupancy rates and
enhanced asset values. The USGBC estimates
that it only costs 2-3% more to build a green
building, and the World Green Building
Trend 2018 study in China said new and
retrofit buildings saw operating costs fall
8-9% in the first year, and 13-14% over a
five-year period, while asset values increased
5-7%. USGBC also estimated that LEED
buildings achieved 4% higher occupancy
rates.
A building’s impact is not just on the
environment but also on the tenants and
surrounding community. The WELL
Building Standard is a system that measures,
monitors and certifies built environment
features that impact human safety, health,
comfort and wellbeing. The scheme
encourages improvement to be made on
air, water, nourishment, light, movement,
thermal comfort, sound, materials, mind
and community to improve the wellbeing of
occupants in a building.
ONE SIZE DOESN’T FIT ALL
When many building sustainability
certifications were first developed, the range
of projects certified was relatively narrow,
with most focusing on large scale premium
commercial premises. This made sense given
the already significant investment being
made in design specifications, tenant profile
and CSR requirements. As sustainability
gathers greater recognition, the sector
matures, authorities push standards and
targets, monitoring technologies advance
and certification companies look to broaden
their reach and impact, the range of
properties that can be certified grows while
the cost of certification continues to fall.
ESG STOCKS
Tenant demand for more sustainable
buildings will only continue to grow as more
firms sign up to sustainable development
goals. This is not only important from
a CSR perspective but can also increase
corporate market valuations and improve
talent attraction and retention. A December
2020 report by Ping’an Digital Research
Centre found that ESG funds outperformed
the China market average. Annualised
returns for pure ESG funds were 47.1%,
environmental-based funds 70.0%, pan-
ESG concept funds 56.4% and corporate
governance funds 47.9%. This is compared
to an average of 42.22% for the overall equity
fund market.
CHALLENGES AND THE ROLE OF
PROPERTY MANAGERS
CO2 emissions from the building sector
(40%) can be broken down into embodied
(12%) and operational (28%), with the former
emitted during project construction and
the latter during the day-to-day running of
the asset. Improvements are being made in
both areas with new materials, designs and
construction practices reducing emissions
during development. Meanwhile, improved
designs, materials and ongoing monitoring
and feedback loops enable more efficient
building operations. Data gathering can also
be important in informing new development
designs or when a building is ready to be
refitted/renovated.
However, systems only work if people know
how to use them and the purpose they serve.
This is where property management firms
come in—communicating and following
up with staff, tenants and other various
stakeholders as well as keeping an eye on
systems to ensure that they are working
efficiently. It is important that not only
NGOs, researchers, policymakers, investors,
developers, designers, builders and material
manufacturers get involved, but also tenants
need to be educated so that they understand
how behaviours affect energy savings.
Buildings use about 40% of global energy, 25% of global water, 40% of global resources and emit approximately one-third of greenhouse
gases. Transforming the real estate industry into an industry with less environmental impact through greater efficiency, better
materials and more conscious choices is of vital importance to the world.
14
China's Property Management Industry
OUTLOOK
China’s real estate market and particularly the property management industry has a promising future. China has a population of 1.4 billion
people, and, assuming a residential floor space of 45 sq m per capita, the residential market alone has a total GFA of 63 billion sq m. Add that to
the 1.8 billion sq m and 521 million sq m of commercial and office space completed in just the last 25 years alone, and the market opportunity is
staggering.
If 35 billion sq m of real estate is currently managed, that would mean just more than half of the country’s real estate market is managed, and the
property management sector could double in size. Additionally, every year urban areas are adding close to 20 million people, and close to one
billion sq m of commodity buildings are being completed.
The market remains highly fragmented, though. The need for improved standards, government regulations, financing channels and technology
network effects means that this is unlikely to last long. At the same time, leading operators have the opportunity to upsell to clients and add on
additional services that could see the current market scale grow from generating RMB1.27 trillion to RMB10 trillion in a few short years. The
addition of new technologies would also help lower costs, and the addition of higher-margin value-added services and rising barriers to new
entrants will mean that established firms will be able to see significantly enhance profits.
15
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RESEARCH
CENTRAL MANAGEMENT PROPERTY & ASSET MANAGEMENT
SERVICES
James Macdonald
Senior Director - China
+8621 6391 6688
Siu Wing Chu
China Chief Executive Officer
+8621 6391 6688
Marco Meng
Senior Director - Head of Property & Asset Management, China
+8621 6391 6688
Chester Zhang
Director - China
+8621 6391 6688
Steven Zheng
Associate Director - Savills Innovation
+8621 6391 6688
Weiwei Lim
Manager - China
+8621 6391 6688
Peter Feng
Associate Director – East China FM & AM
+8621 6391 6688
Jack Wang
Associate Director – East China Integrated Consultancy Services
+8621 6391 6688
Stella Chen
Senior Manager – East China Sustainable Development
+8621 6391 6688
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