The Zhitong Finance app learned that Caixin Securities released a research report saying that as the urbanization process continues to advance and residents' living standards improve, demand in the property management industry will continue to grow. The domestic property industry generally binds designated property companies in the form of long-term contracts, increasing the stickiness of customers to property services, and at the same time enabling property companies to have a relatively stable income scale and cash flow level. National property companies are expected to gain a foothold in the market with advantages in terms of capital strength, management ability and service quality, and enjoy the urban dividends of the industry. It is recommended to focus on leading A-share property companies: Investment Savings (001914.SZ) and Nandu Property (603506.SH).

The report mentioned that China's modern property management was introduced to the mainland from Hong Kong in the 1980s, and the country's first property management company, Shenzhen Property Management Company, was founded in 1981. The development of the property industry in China has gone through many stages: before 2003, most property companies basically relied on blood transfusions from real estate parent companies; in 2003-2013, with the gradual expansion of stock, property companies moved back to marketization and embarked on a path of independent development. After 2014, the property management industry was gradually favored by the capital market, attracting high-end talents to join, and the development of the industry entered a more virtuous cycle. The development of property management has improved the problems of simple and inefficient traditional housing management, and promoted the supporting and organic integration of real estate development, management, and services. Through the effective use of social resources, the living environment and working environment have been improved, employment opportunities have also been provided to society, and the development of the urban service industry has been promoted.

The bank believes that the main sources of revenue for property management companies are property management fees and value-added services, and that expanding the management area is an important direction during the growth period of the industry. The expansion of scale, on the one hand, helps export management mechanisms and creates a scale effect; on the other hand, it helps enterprises increase their influence. Until 2021, various resources such as policies and capital were skewed towards the property industry, and the sector as a whole maintained a high pace of development. However, after experiencing the negative impact of the downturn in real estate, the side effects of expansion through acquisitions gradually became apparent. In 2022, many property management companies experienced extensive intangible asset impairment. Enterprises began to re-examine acquired assets and strengthen integrated management after acquisition. In the context of the real estate industry facing capital chain pressure and a sharp decline in the scale of investment, the convertible contract area of real estate companies has been reduced, and third-party expansion has become the key for property companies to maintain market competitiveness.

In 2021, China's property management area reached 36.526 billion square meters, an increase of 4,542 billion square meters over the management area of 31,984 billion square meters in 2017, with an average annual growth rate of about 3.3%. In the future, the housing demand of Chinese residents will continue to expand. On the one hand, there is still room for improvement in China's urbanization rate, which will steadily provide the main incremental area for property management; on the other hand, in the future, new urban renovation and upgrading will become another source of added value.

Furthermore, the old property industry focuses on management, and the service content is limited to the traditional “Four Guarantees” service, which targets the vast majority of residential houses. Today's “new properties” focus more on services. From the original basic property management, service content has been upgraded, including value-added services, urban services, and smart properties, etc., and the business model and business layout have changed drastically. In 2021, the value-added service revenue of the top 500 real estate companies exceeded 5 million, an increase of 40.9% over the previous year. Community old-age services are expected to become an important development direction for value-added property management, and the market size is expected to reach 367-406 billion yuan/year in the next five years.