Vanke Dives Into Real Estate Brokering With USD436 Million Buy Into Lianjia

Chen Shuzhen / Yicai

2017-04-20

(Yicai Global) April 20 -- Real estate agencies look set to become hot property as two major developers pour money into a leading brokerage.

Leading Chinese property developer China Vanke Co. [SHE:000002] feels optimistic about the future of Beijing Homelink Real Estate Agency Co., one of the nation’s most prominent real estate agencies and also known as Lianjia, and plans to buy CNY3 billion (USD436 million) of its shares, a Vanke employee told Yicai Global. He did not disclose how many shares the firm would acquire through the deal.

Sunac China Holdings Ltd. [HKG:1918], another Chinese developer, was the first contractor to set its sights on Lianjia. It paid CNY2.6 billion in January for a 6.25 percent in the agency, suggesting Vanke will be looking at acquiring a roughly 7 percent stake in their upcoming deal.

The latest deal will see two of the largest companies in their respective industries team up. Last year, Vanke’s sales were almost CNY365 billion, taking its market share to 3.1 percent. Media reports suggest that Lianjia’s trade volume topped CNY1 trillion in the first eleven months of 2016 and it captured half of Beijing’s property market.

The investment will mark the second time that the pair have combined. In August 2015, the two firms fronted CNY30 million to set up Vanke Homelink Beijing Decoration Co.

The root cause of the developers’ moves into housing agencies lies in China’s upcoming era of ‘inventory homes,’ where contractors sign deals long before construction begins and allow buyers to have their say on how the properties are decorated. Annual new-build sales volume across the nation has hit CNY10 trillion, according to WorldUnion Corp. data, with inventory homes making up 60 percent of the figure. Yearly sales of these personalized new properties are expected to reach CNY10 trillion in the future, the statement said.

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