Suxin Good Life Service Co., Ltd. (hereinafter referred to as 'Suxin Services') successfully went public on August 24, 2022, with a global issuance of 25 million shares at an issue price of HK$8.60 per share, raising approximately HK$167 million.
During the process of listing in Hong Kong this time, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, investment banks, and other intermediaries in completing the relevant parts of the prospectus (such as overview, competitive advantages and strategy, industry overview, business, and other important chapters), helping the issuer complete communication with the Hong Kong Stock Exchange and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and assisting the issuer in completing feedback on various industry-related issues from the Hong Kong Stock Exchange, etc.
Overview of Property Management Services Market in Yangtze River Delta Region and Suzhou
Most property management companies in China provide services for different types of properties, including residential and non-residential properties. Non-residential properties mainly include office buildings, shopping malls, public utilities, industrial properties, etc. Property management companies usually offer (i) traditional property management services; as well as (ii) other services, including value-added services provided to property developers and community value-added services. Value-added services provided to property developers mainly include pre-delivery services and consulting services. In addition, with the development of the property management service market, there are also an increasing number of property management companies providing smart city services.
For traditional property management services, property management companies can charge management fees under either a lump-sum or fee-based system. The lump-sum system is the mainstream charging model in the Chinese property management service market. By adopting the lump-sum system, property management companies can manage costs through a series of cost-saving measures, including reducing labor dependence through standardization, automation, and intelligent management of service processes.
In terms of pre-delivery services, the general charging model is a lump-sum system, where property management companies charge fixed fees based on the total managed area or according to the number and position of employees providing related services. For consulting services, service fees are mainly charged on a lump-sum basis according to the total managed area, or as a percentage of the income or profit from property management services provided. In the Chinese property management service market, it is more common to adopt a lump-sum system for consulting services.
The Yangtze River Delta region mainly includes Shanghai Municipality, Jiangsu Province, and Zhejiang Province. The 'Regional Plan for the Yangtze River Delta Region' released by the National Development and Reform Commission in 2010 indicates that the Yangtze River Delta is a region with leading comprehensive strength in China, possessing an important strategic position and playing a prominent role in promoting China's economic and social development.
Market scale of property management service market in the Yangtze River Delta region
In the Yangtze River Delta region, the total managed building area of property management companies increased from 5.14 billion square meters in 2016 to 6.51 billion square meters in 2021, with a compound annual growth rate of 4.8%. By 2026, the total managed building area is expected to reach 7.87 billion square meters, with a compound annual growth rate of 3.9% from 2021 to 2026. In 2021, the total managed building area of non-residential properties reached 1.39 billion square meters, with a compound annual growth rate of 6.8% from 2016 to 2021. By 2026, the total managed building area of non-residential properties is expected to reach 1.8 billion square meters, with a compound annual growth rate of 5.3% from 2021 to 2026.
Total managed building area of property management companies in the Yangtze River Delta region
Source: Frost & Sullivan report
From 2016 to 2021, the total revenue of property management companies in the Yangtze River Delta region increased from RMB 74 billion to RMB 142.7 billion, with a compound annual growth rate of 14.0%. In 2026, the total revenue of property management companies in the Yangtze River Delta region is expected to reach RMB 243 billion, with a compound annual growth rate of 11.2% during the period from 2021 to 2026. From 2016 to 2021, the total revenue of non-residential property management services provided in the Yangtze River Delta region increased from RMB 32.5 billion to RMB 63.1 billion, with a compound annual growth rate of 14.2%. In 2026, the total revenue of non-residential property management services is expected to reach RMB 110.7 billion, with a compound annual growth rate of 11.9% during the period from 2021 to 2026.
Total revenue of property management service companies in the Yangtze River Delta region
Source: Frost & Sullivan report
Market scale of property management service market in Suzhou
The total managed building area of property management companies in Suzhou City increased from 4.847 million square meters in 2016 to 5.957 million square meters in 2021, with a compound annual growth rate of 4.2%. In 2026, the total managed building area is expected to reach 7.143 million square meters, with a compound annual growth rate of 3.7% from 2021 to 2026. In 2021, the total managed building area of non-residential properties reached 1.399 million square meters, with a compound annual growth rate of 6.1% from 2016 to 2021. In 2026, the total managed building area of non-residential properties in Suzhou City is expected to reach 1.794 million square meters, with a compound annual growth rate of 5.1% from 2021 to 2026.
Total managed building area of Suzhou property management service companies
Source: Frost & Sullivan report
From 2016 to 2021, the total revenue of property management companies in Suzhou City increased from RMB 10 billion to RMB 19.6 billion, with a compound annual growth rate of 14.4%. In 2026, the total revenue of property management companies in Suzhou City is expected to reach RMB 332 billion, with a compound annual growth rate of 11.1% from 2021 to 2026. From 2016 to 2021, the total revenue from providing non-residential property management services increased from RMB 4.8 billion to RMB 9.3 billion, with a compound annual growth rate of 14.1%. In 2026, the total revenue from providing non-residential property management services is expected to reach RMB 164 billion, with a compound annual growth rate of 12.0% from 2021 to 2026.
Total revenue of Suzhou Property Management Service Company
Source: Frost & Sullivan report
Opportunities for the development of property management service market
Expand service scope and provide value-added services:In recent years, the service types in the property management service market of the Yangtze River Delta region have gradually expanded, extending from traditional property management services to providing various value-added services for office buildings, industrial parks, public properties, etc. It is expected that in the future, more property types will be covered. Property management companies have been continuously expanding their service content, including life services (such as education, healthcare, etc.) within their scope of services. The profit margins of value-added services such as consulting services and community rentals are usually higher than those of traditional property management services. In addition, providing value-added services helps property management companies improve customer loyalty and enhance brand image. At the same time, the growing demand for professional property management services from different types of properties will drive further innovation in service standards and models in the property management service market of the Yangtze River Delta region.
The potential of second- and third-tier cities:Although the Yangtze River Delta region includes several economically developed cities such as Shanghai, Nanjing, and Hangzhou, second- and third-tier cities like Wuxi and Changzhou in Jiangsu Province, and Ningbo and Wenzhou in Zhejiang Province still have great potential. This is conducive to expanding the geographical coverage of property management service companies. In addition, the relatively immature property management service markets in these cities also provide potential opportunities for property management companies planning to increase their market share in second- and third-tier cities.
Overview of Suzhou Urban Service Market
Urban services mainly refer to various services provided by the government and public sectors to meet the daily living needs of local residents. Urban services mainly include (i) property management services, which include cleaning, order maintenance, gardening landscapes, and upkeep services for municipal office buildings and public cultural and recreational facilities; (ii) maintenance services for municipal infrastructure such as public roads to ensure their cleanliness and normal operation; and (iii) urban waste management services.
Market scale of Suzhou urban service market
In recent years, with the rapid development of infrastructure construction, the demand for urban services has been continuously increasing. From 2016 to 2021, the total revenue provided by property management service companies in Suzhou City from urban services increased from RMB 2.55 billion to RMB 3.94 billion, with a compound annual growth rate of 9.1%. In 2020, the Chinese government issued the 'Urban Appearance Standards (Trial)' aimed at strengthening guidance, supervision, and evaluation of urban appearance management and improving the level of refined urban management. Favorable policies will further promote the development of the urban service market. By 2026, the total revenue provided by property management service companies in Suzhou City from urban services is expected to reach RMB 56.6 billion, with a compound annual growth rate of 7.5% between 2021 and 2026.
Total revenue from urban services provided by Suzhou Property Management Service Company
Source: Frost & Sullivan report
Opportunities for the development of urban service markets
Expand the service scope and development potential of urban operation services:With the development of the property management service market, property management service providers have been committed to expanding their service scope to include a more diversified portfolio of properties. At the same time, the transformation of government functions has led to an increasing demand for public and government facilities in urban operational services, creating significant development space for property management service providers to expand their revenue sources and also stimulating the demand for professional urban services.
Integration of Urban Services:Governments and public management departments typically regard the management of public areas as a comprehensive property management project, which places high demands on the integration of management operations for public areas, providing services including community governance, the operation and maintenance of specific public construction projects, as well as corporate and asset services. Therefore, with the further development of urban operations and urban services, service providers capable of effectively integrating various urban services will enjoy a competitive advantage in the Chinese property management service market.
Market competition pattern of property management services in Suzhou
In terms of total revenue, the top five property management service providers in Suzhou in 2021 accounted for about 8.5% of the total revenue of property management service companies in Suzhou. Suxin Service ranked first, accounting for about 2.3% of the total revenue of property management service companies in Suzhou.
Top 5 Property Management Service Providers in Suzhou by Total Revenue in 2021
Data source: Corporate annual reports, Frost & Sullivan reports
Based on the total managed building area, the top five property management service providers in Suzhou in 2021 accounted for about 6.1% of the total managed building area of property management service companies in Suzhou. Suxin Services ranked fourth, accounting for about 1.1% of the total managed building area.
Top 5 Property Management Service Providers in Suzhou by Managed Building Area in 2021
Data source: Corporate annual reports, Frost & Sullivan reports
In the Suzhou urban service market, ranked by urban service revenue, the top five property management service companies in 2021 accounted for approximately 14.1% of the total urban services provided by Suzhou's property management service companies. Suxin Service ranked first, accounting for about 4.3% of the total urban services provided by Suzhou's property management service companies.
Top 5 Property Management Service Providers in Suzhou by Urban Service Revenue in 2021
Frost & Sullivan has extensive research experience in the property and real estate industry, assisting well-known enterprises in successfully listing on the capital market. Successful listings include: Desen Property Investment (2270.HK), China Resources Vanguard (1209.HK), Excel Real Estate Group (6989.HK), Bao Long Commercial (9909.HK), China Tianbao (1427.HK), Yincheng Life Services (1922.HK), Fangduo (NASDAQ:DUO), Xinyuan Technology Services (1895.HK), CITIC Holdings (NASDAQ:CIH), Lejia Si Holdings (1867.HK), Aoyuan Health (3662.HK), Chuangyi Holdings (3992.HK), Joyou Property (2168.HK), Baoyan Holdings (8601.HK), Hengyu Group (2448.HK), Yajiu Investment Holdings (8426.HK), Red Star Macalline (1528.HK), and others.
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