The property management industry is entering a new normal, and problems such as revenue increase but not profit increase, accounts receivable, and asset impairment continue to ferment, and the operating performance of property enterprises has been tested.
In the first half of 2024, the average net profit of 65 listed property companies will decline by 3% year-on-year, and less than 10 companies will have profit growth exceeding revenue growth.
The difficulty of investment and development of property enterprises is increasing, and the competition for investment and development of high-quality property projects is becoming more and more fierce.
At the same time, all kinds of Party A requirements are becoming more stringent, and new forces are rising, such as the era of "large-scale development" to "large-scale operation", and urban investment and construction engineering enterprises are accelerating their "backward" layout.
In such a market background, what are the new ways out for property enterprises?
Judging from the mid-term reporting season of listed property enterprises just past, in the first half of 2024, problems such as revenue increase but no profit increase, accounts receivable, and asset impairment will continue to ferment.
In the first half of the year, the average net profit of the 65 listed property companies that have disclosed interim results was 140 million yuan, down 29.9% year-on-year, and the average net profit margin decreased by 3.1 percentage points to 6.3%. Among them, there are only 9 companies with net profit growth exceeding revenue growth, and as many as 37 companies with profit losses or declines, an increase of 4 from the end of 2023. The lack of profit gains is still spreading.
In the first half of 2024, the average asset impairment loss of listed property enterprises reached 140 million yuan, compared with 50 million yuan in the same period last year, an increase of 153.7%. Large amounts of accrual by individual enterprises are still the main cause of profit losses.
In terms of cash and cash equivalents, in the first half of 2024, the average cash and cash equivalents of 65 listed property companies were 1.74 billion yuan, a year-on-year decrease of 6%, and nearly 60% of the cash and cash equivalents of enterprises declined.
At the same time, it should be noted that the growth rate of accounts receivable was lower than the growth rate of revenue for the first time, and the amount of accounts receivable of 12 enterprises exceeded revenue. In the first half of 2024, the average accounts receivable of 62 listed property enterprises will be 1.78 billion yuan, a year-on-year increase of 3.6%, and the growth rate will be 17.2 percentage points lower than that of the same period last year. The accounts receivable of 12 property enterprises, including Dexin Services, Songdu Services and Rongwanjia, were higher than their operating income, and the accounts receivable of Country Garden Services were as high as 23.78 billion yuan, accounting for 113% of their operating income.
In the first half of 2024, many companies actively reduced their transactions with related parties as a way to curb the growth rate of accounts receivable. However, the proportion of accounts receivable of related parties of some enterprises is still at a high level, such as KWG Living and Jianye New Life, which both account for more than 50%, and Ya Life Service and Wanwuyun also account for more than 40%.
With the rise of the risk of accrual of accounts receivable of related parties, hundreds of millions or even billions of yuan of parking space deposits have begun to affect the cash flow of enterprises. In the first half of 2024, the proportion of prepayments, deposits and other receivables in accounts receivable and bills of some enterprises is still high, such as Shimao Service and Greentown Service, which are both around 50%.
1. C-end market: the increment is shrinking, and it is difficult to break through the price under the "price limit tide".
In 2023, the supply area of commercial housing in Baicheng will be as low as 260 million square meters, down 56% from the high of 590 million square meters in 2020; The sales area was as low as 290 million square meters, down 43% from the 2021 high of 520 million square meters. In the first half of 2024, the supply and sales area of commercial residential buildings in Baicheng will be 90 million square meters and 100 million square meters, respectively, a year-on-year decrease of 34% and 39%.
Since 2023, Guangzhou, Qingdao, Chongqing and other cities have successively announced the property service fee standards, and the government's guidance price has remained unchanged for many years. For example, in Guangzhou, the maximum property service fee for the first level of residential property service does not exceed 2.8 yuan/square meter ·per month, which has remained unchanged for 13 consecutive years. Another example is Chongqing, where the property service fee in the early stage is up to 1.9 yuan / square meter · month, and the government's guidance price has also remained unchanged for 8 consecutive years.
2. C-end market: the stock of high-end market is small, the old community is difficult, and the remaining sixty percent is fiercely competitive
The stock residential market can be divided into three categories: high-end, mid-end and old projects, based on cross-statistics of property fees, building age, scale and other indicators, it is not difficult to find that the high-end market is small, accounting for less than 5%; The old community accounts for about 35%, but there are many problems such as old facilities and equipment, and it is difficult to provide property operation services; The remaining 60% of the mid-market investment competition is fierce, which can be described as the "Red Sea Zone".
According to the data of CRM's "2024 Residential Property Service Satisfaction Questionnaire", the proportion of owners who think that property fees are unreasonable is as high as 44.2% in mid-end projects, which is significantly higher than the proportion of owners who think that property fees are unreasonable in high-end and old projects, indicating that the risk of property fee reduction in mid-end projects is high.
The investment and expansion strategies of property enterprises are basically converged, and the focus of expansion is on mid-end projects, resulting in more and more fierce competition in mid-end project investment and expansion. In 2023, the property fees of listed property enterprises will mainly be concentrated in the range of 2-4 yuan / square meter · month, such as Poly Property will expand the average property fee of stock residential buildings in 2023 3 yuan / square meter · month.
3. B-end market: Party A's budget is tightened, the account period is lengthened, the supervision is stricter, and the subcontracting increases.
According to the "2024 Enterprise Administrative Ecology Analysis Report" of CRIC Property Management, nearly 5% of the enterprise budget has declined, ranging from 10% to 30%, and the account period has been extended from 3 months to 10 months.
The bidding requirements are refined, and the supervision of enterprises is becoming stricter. First of all, the demand is pre-positioned, and the invitation for bidding is refined. Taking the catering service of a cultural and sports center as an example, the invitation to bid specifically involves the requirements of service personnel, the time of meal production, quality inspection, etc. Second, establish a COE team to supervise suppliers, such as Huawei's administrative professional COE competence center, to establish professional standards, baselines, systems, and processes.
The proportion of enterprise subcontracting continues to rise, and the proportion of enterprise subcontracting will rise to 70.0% in 2024, an increase of 7.9 percentage points from 2023.
4. G-end market: budget reduction, low-price competition, extended account period, and strict settlement.
First, the government budget fell. From 2018 to 2022, the proportion of government procurement of services slowly decreased from 3.54% to 2.77%, a net decrease of 0.77 percentage points.
Second, low-price competition is likely to intensify. In May 2024, the Ministry of Finance issued the "Standards for Government Procurement Demand for Property Management Services (Office Space) (Trial)", which will form a good supplement to the "Administrative Measures for Bidding and Bidding for Government Procurement of Goods and Services", indicating that the future policy guidance may tend to encourage the use of low-price bid evaluation methods, and the bidding for government public construction properties may become more intense.
Finally, the account period is lengthened and the settlement is strict. The account period of G-end business is generally extended from 3 months to 10 months, and the settlement amount is not allowed or only slightly higher than the government budget.
In the context of the transformation from "large-scale development" to "large-scale operation", urban investment enterprises and construction enterprises, as a new force, are accelerating their back-end layout. At present, these companies are facing similar challenges in many sectors such as residential, commercial office, industrial parks, and public buildings: the area of new housing has been significantly reduced, and the incremental market space has been compressed; The development of commercial projects is subject to stricter supervision; The vacancy rate of industrial parks continues to rise; reduced demand for large properties; Infrastructure construction and transportation infrastructure construction have stabilized, resulting in a reduction in the scale of front-end development and construction operations. In the face of these challenges, enterprises are actively seeking transformation paths to accelerate the deployment of operations and services.
In the process of transformation, enterprises usually adopt two strategies: one is to position themselves as a comprehensive operation service provider; The second is to extend diversified businesses. For example, China State Construction Group (from Bureau 1 to Bureau 8) is gradually shifting its investment department to operations; China Communications Construction Group provides integrated services covering transportation infrastructure planning, investment, construction and operation; China Railway Group is positioned as a service provider for urban construction and investment and operation.
In terms of diversified new business extension, in addition to traditional property management, these enterprises are also involved in many fields such as intelligent operation and maintenance of public buildings, energy conservation and emission reduction management services, and road and bridge maintenance.
It should be noted that in the context of improving the quality and efficiency of state-owned assets reform, the tide of state-owned assets reform and integration is coming, and more logistics property groups in various fields are about to become another new force.
1. Ascending ability
In view of the market dilemma, enterprises should still start from themselves, strive to create new quality service capabilities, and improve customer service experience, mainly involving the following three aspects:
First of all, the construction of service standards for various formats consolidates service capabilities. For example, Vanke Service released the industry's first "Community Children's Property Service Manual", established a children's service system of "Caring for Growth· All Things for Children", and further improved the service standards for community children. Another example is the iterative upgrade of the "White Paper on Non-residential Service Standards" to further optimize the service process and guide the high-quality implementation of national project service standards.
Second, reserve high-latitude capabilities and extend FM and other services. For example, Poly Property upgraded its traditional IFM services and launched a "super fast charging mode" service system in the field of commercial services, providing enterprises with continuity guarantee for the whole chain of production, operation, office and life, so that customers can better focus on their main responsibilities and main businesses, and improve production efficiency and management efficiency. Another example is that the professional capabilities of China Merchants Accumulation extend to different fields such as facility management, asset services, and value-added services, and various types of professional companies are set up in different fields to undertake business, so as to achieve a clear professional division of labor and comprehensive coverage of the industrial chain.
From the perspective of the extension of the service capabilities of typical foreign property enterprises, Aramark, Tokyu Real Estate, Sicom and other enterprises have built moats through service extension. For example, Aramark extended from group catering to FM, with revenue of 13.69 billion US dollars in FY2022, Tokyu's real estate business extended to the full cycle of real estate, and the real estate agency business ranked second in Japan, and Sicom extended to the entire security chain, with revenue of 1.2273 billion yen and a net profit margin of 8.9% in 2023.
Finally, organizational ability improvement and COE team building. For example, COPL has built a COE team through seven aspects: cultural integration, strategic support, establishment of rules and regulations, team formation, reengineering process, and linkage implementation. Another example is that in the super high-rise service format, in view of the characteristics of complex equipment maintenance and large flow of people, the first COE team of the super high-rise special committee in the industry has been established, and the members have more than 10 years of relevant operation and management experience.
2. Set a benchmark
The benchmarking project is the best carrier to show the service strength of the enterprise, and it is also the amplifier of the company's brand promotion. Therefore, property enterprises should continue to create benchmarking projects and systematically build benchmarking systems.
On the one hand, the benchmarking dimension is more refined, creating a non-residential benchmark. For example, China Construction Eighth Bureau, Sunac Services and other property enterprises assisted the city government to jointly create a city business card in the process of serving the Asian Games venues, and won unanimous praise from government departments.
On the other hand, benchmarking is more systematic and systematic. For example, Poly Property has established a benchmark project acceptance system, covering the three major business areas of residential, commercial and public services, and has set corresponding evaluation indicators according to the characteristics of different business formats, so as to select benchmark projects among many management projects and systematically and systematically promote the construction and management of benchmark projects.
3. Brand voice
In order to better display the brand image of the enterprise, the brand voice needs to strengthen positive publicity and public opinion management, which mainly involves the following three aspects:
First, there are probationary services and innovative forms of communication. For example, the content and effectiveness of property services are publicized on the public notice board and WeChat Moments, including the comparative renderings before and after the project transformation, so that the owners can intuitively feel the actual value brought by high-quality property services.
Second, effective public opinion management. For example, during the "3·15" period in 2024, Poly Property once again launched the "Welcome to Find Things 2.0" activity, and after more than a month, a total of 11,318 new projects were renewed in residential communities across the country, with a completion rate of 94% in the first phase of renewal commitments, truly achieving advocacy, action and feedback.
Third, to create a "concentric circle" of the main body of the brand, everyone is a brand official. In addition to the corporate brand center as the core brand body, it is also necessary to guide the employees of the enterprise to actively participate in the construction of the brand team, shape those potential employees into brand pacesetters, and provide professional training and empowerment for brand pacesetters. At the same time, innovative services and community activities can be carried out at the project level to enhance the stickiness of owners, and in the process of activities, senior owners can be found and guided to join the corporate publicity matrix.
4. Build trust
Trust is the core of resolving the conflict between the owner and the enterprise, and the enterprise can build a close trust relationship with the owner through measures such as service sunshine and visualization.
On the one hand, the visualization and sunshine of service content increase trust. For example, regularly publish property service reports to ensure the transparency of service processes and results, and disclose financial management to enhance financial transparency. Another example is to promote the sound and visualization of property services, that is, to let owners understand the content and effect of property services more clearly through audio and video.
On the other hand, establish sunshine evaluation criteria. For example, Changcheng Property actively explores the Sunshine Property Management model, and jointly releases the "White Paper on Sunshine Community Evaluation Criteria" with CRIC Property Management to enhance the trust relationship between enterprises and owners through core measures such as financial sunshine, service sunshine, and co-construction of sunshine.
The property management industry is undergoing a major transformation, which is both a crisis and a turning point.
In response to market changes, enterprises need to move closer to more professional and advanced service enterprises, and the industry also needs to be more standardized, open and transparent.
For enterprises, it is also necessary to continue to improve in terms of capability upgrading, benchmarking, brand voice, trust building, etc., to enhance core competitiveness and promote the high-quality development of the industry.