FB Pixel no scriptZhuge.com helps buyers find their dream home faster: Inside China’s Startups | KrASIA

Zhuge.com helps buyers find their dream home faster: Inside China’s Startups

Written by Song Jingli Published on   4 mins read

The company wants to increase efficiency and cut costs for real estate brokers and homebuyers.

Buying a home is one of the most important decisions in life, but picking the “one,” out of tens of thousands of properties, is time-consuming and costly work for potential buyers, especially in large Chinese cities.

To solve this problem, an array of online portals such as 5i5j (SHZ: 000560), Lianjia, which is now owned by Ke Holdings (NYSE: KEKE), Fang (NYSE: SFUN), and Anjuke have sprung up to provide Chinese citizens with property listings complete with key information such as floor area, price, and location. A new player, Zhuge.com, aims to further increase efficiency and cut costs for real estate brokers and homebuyers by making information more accessible.

“It sometimes takes three generations’ savings for a young family to buy a home, so they deserve all the information on a property’s past and current life, to be better informed to make a wise decision,” Su Weijie, chairman and founder of Zhuge, told KrASIA, referring to his original inspiration when he established the firm in late 2015 in Beijing.

The company has gained support from various investors including Fosun RZ Capital and Vision Plus Capital, and has closed seven rounds of fundraising in less than five years, raising RMB 100 million (USD 15 million) in its latest Series C2 round earlier this month.

Xu Weidong (left), CEO of Zhuge.com, and Su Weijie (right), chairman and founder of the company. Photo provided by the company.

Streamlining information

Unlike 5i5j, founded in 1998, and Lianjia, founded in 2001, two established real-estate brokerage companies that both gather information directly from home sellers, Zhuge collects data from various online portals via its in-house developed search engine called Zhuge-HBSE System.

In China, it is normal for a home seller to entrust more than one broker to sell their property resulting in many repetitive listings for one property.

Zhuge’s system automatically aggregates and organizes the listing information of properties from various brokers, providing users with a detailed and comprehensive listing for each property. For example, Zhuge.com listings include information such as when the property was first listed, a price history with different brokers, how different brokers charge commissions, and a historical archive of homes sold in the same neighborhood. 

“In Beijing, Lianjia charges 2.7% of a deal value as commission, while 5i5j takes 2.2%, and Jinse Shiguang, the fifth-largest brokerage in the city, charges only 1%,” Su Weijie, chairman and founder of  Zhuge, told KrASIA, adding that while firms might be selling the same property, the final cost for the home buyer can vary depending on the brokerage company.

In addition to data gathered by the search engine, Zhuge’s big data system has also included data directly from real estate brokerages, including 5i5j, as well as smaller local firms such as Fangfangwang in Changchun, capital of Northeast China’s Jilin province and Haoxiangjia in Pingyang, Wenzhou, Zhejiang province.

Data-driven approach to recording transactions

Buyers use Zhuge to make an informed decision on a property, and when they have chosen a house they will go to a brokerage’s offline location to execute the transaction. As a result, Zhuge has faced difficulties breaking into the lucrative transaction side of the home buying process.

In 2017, the company began work on a Software-as-a-Service (SaaS) product called Wolongyun, which allows real estate brokerages to digitally record and organize each transaction. The software was launched at the beginning of this year.

Zhuge.com in Wenzhou
Zhuge.com has been in operation in more than 850 cities in China, including large cities like Beijing and smaller cities like Wenzhou. Photo provided to KrASIA

Zhuge charges brokerages for listing and promoting properties for sale or for rent directly on Zhuge.com or on the Zhuge mobile app. While its online portals only generate revenue for Zhuge from brokerages’ marketing activities, the company leverages Wolongyun to generate revenue from transactions.

Zhuge can take 1% to 2% of the sales or rent commissions from cooperating brokerages that use Wolongyun to store the deal info. Zhuge’s slice of the commission is much lower than the 8% average rate charged by industry incumbent Beike.

“Our SaaS business segment has been growing so fast that it could exceed revenue from the online portal business by the end of this year,” Su told KrASIA, adding that the company’s cash flow has turned positive amid the COVID-19 pandemic outbreak.

Real estate brokerage to feature in a buyers’ market

“In China, 70% of urban Chinese citizens already own their properties and the average area for each individual is nearly 40 square meters as of 2018, which means that supply is larger than the demand, resulting in a buyers’ market, where buyers have more bargaining power,” Zhuge’s founder concluded.

In this case, new property developers and second-hand home buyers will increasingly leverage brokers to sell their assets.

“China’s real estate brokerage market is far from being consolidated,” he said.

Despite being the country’s largest real estate platform, Ke Holdings, also known as Beike, only accounts for less than a 10% share of a total market worth RMB 23 trillion. It generated just RMB 2.1 trillion (USD 301 billion) in gross transaction volume in 2019.

In addition, Beike derived a substantial portion of its revenues from Beijing and Shanghai, as much as 35.1% in 2019, indicating the company has a weaker presence in smaller cities.

“And this means there is still plenty of room for growth for other companies and we hope we could grow to be a company with a market capitalization of USD 10 billion in the future while increasing efficiency in the sector,” Su explained.


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