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5 takeaways from MetaProp’s latest deep dive on proptech in China

Written by Brady Ng Published on   3 mins read

Every successful proptech firm in the west has its local counterpart in the most populous country in the world.

A home may be the most expensive purchase most of us will ever make. The process can be daunting—making an offer, taking out a loan, and all the while ensuring that one’s savings can more than cover the down payment. But before all of that happens, there is the search: new or pre-owned? Closer to a transportation hub, or farther off for a quieter place with a bit more privacy? Locating the right home is often a complicated process, one that used to involve many viewings and staying tuned to what was up for sale.

Some proptech companies have sped up that process. Others operate in entirely separate arenas, like co-working spaces, home decoration, or access control. There is no shortage of proptech providers in China. Most are located in Beijing (103) and Shanghai (85), although Shenzhen (43) and Hangzhou (28) have a good count too.

To unpack the proptech scene in China, real estate-focused investment firm MetaProp embarked on a research project to decipher the ins and outs of the sector, and logged their findings in a new report, “Deep Dive: Proptech in China.”

Here are five key points from MetaProp’s latest deep dive into China’s proptech sector.

#1: Proptech providers in China have deep war chests

Plenty of startups who develop services related to real estate have big-name investors—Sequoia Capital, Tencent, ZhenFund, Alibaba, and Hillhouse Capital, to name a few. Startups that deal with residential listings and brokerages have received major capital inflows while those in the commercial sector are catching up. Beike, Ziroom, and Lianjia are the most well-funded proptech companies in China, while those who went public now list on the NYSE, Nasdaq, and Hong Kong Stock Exchange.

#2: Every major internet company has a playbook for real estate

Homeownership is the ultimate goal for many people in China—the consequence of stable income paired with sound financial management. Internet companies that are masters at keeping hold of our attention and persuading us to make one more purchase have all moved into real estate too. Some sell residential homes on their existing marketplaces (Alibaba, JD.com), while others invest in or acquire proptech developers for more active engagement with the sector (Tencent, ByteDance, Xiaomi) through the likes of listings apps or smart home designers.

#3: Local proptech developers are agile, so foreign entrants beware

It’s no secret that foreign companies face regulatory and compliance hurdles in China. More importantly, extensive knowledge about local habits related to purchasing homes and customer preferences is key to matching up with prospective homebuyers. Even if a (foreign) proptech firm overcomes all those barriers, the local market is already packed with highly competitive startups that are able to move fast and add new service verticals at breakneck speed.

#4: Real estate developers need proptech for new services

Nice residences require active management, and that’s no mean feat when a single residential complex can house thousands of people. Property management is now an important source of revenue for real estate companies in China, and proptech features make that job much more, well, manageable. Whether it’s tenant engagement apps, IoT smart home systems, or AI-powered security, there’s a startup in China building it.

#5: The winners take all

Vanke, Country Garden, and Evergrande—China’s largest real estate companies—are already sitting pretty by holding on to large shares of the market. By soaking up new proptech solutions to work alongside proprietary creations, these companies will likely hold onto their dominant status. That is to say, proptech doesn’t disrupt the existing hierarchy so much as it reinforces the rankings that are already in place.

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