SHANGHAI—Companies dealing in real estate are combining in China as the property downturn lingers and the emergence of Internet services upends the business.
58.com Inc. —the Chinese equivalent of Craigslist Inc., backed by Internet giant Tencent Holdings Ltd. —said Monday it had acquired Shanghai-based property-listing platform Anjuke Inc. for about $267 million in cash and shares. It marked the latest deal in China’s fast-growing market for services that connect online users with traditional offline businesses.
In another deal, announced on Sunday, Homelink Real Estate Agency Co., Beijing’s largest real-estate firm by market share, will combine with Shanghai Deovolente Realty Co. Homelink, which is much larger than Deovolente in terms of employees and outlets, characterized the deal as a merger but didn’t disclose terms.
Since 2011, real-estate companies have weathered a volatile market and the rise of China’s e-commerce companies. Conditions have worsened since 2013 because of a huge supply of homes, especially in smaller cities. Housing sales in China fell 7.8 per cent nationwide in 2014, and home prices in many smaller cities declined significantly, squeezing profits.
In February, average home prices in 100 Chinese cities fell 3.8 per cent from a year earlier, the fifth straight month of year-over-year declines, according to private sector data provider China Real Estate Index System, an arm of SouFun Holdings Ltd.
Last year, more than a dozen property companies, including Deovolente and Homelink, announced a boycott of China’s largest real estate Internet portal, SouFun, arguing that it charged unfair prices for listings on its website. SouFun disputes the accusations.
In January, Chinese real-estate firm Century 21 China Real Estate was delisted by the New York Stock Exchange after it failed to maintain required market capitalization. The company has said the delisting won’t deter it from increasing its business.
58.com said revenue growth from the housing sector slowed in the third quarter as a result of the housing slump. Some real-estate firms have cut back on the number of branches and on online marketing expenses, said Zhou Hao, 58.com’s chief financial officer, according a transcript of a company conference call.
Anjuke, which was founded in 2007, sees 66 million unique visitors to its site each month, according to its website. Anjuke covers 67 cities in China and said it would continue to operate its website and mobile application under the Anjuke brand.
Deovolente, the Shanghai brokerage, said that after its combination with Homelink, the combined company would be called “New Homelink.” The combined firm will focus on developing its online-to-offline marketing strategies, the Deovolente statement said.
Homelink will combine its 1,800 storefront outlets, and 35,000 staff with Deovolente’s more than 200 storefronts and 5,000 staff, it said.