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Chinese realtors fall out with China domestic portals
By Juwai, 12 August 2014
By Andrew Taylor, Co-Founder & Co-CEO, Juwai.com
A dark storm is brewing in China’s local real estate market, causing headache for SouFun – one of China's larger domestic property portals.
As news broke about Chinese realtors and property agents staging a boycott and leaving SouFun en masse, SouFun’s shares have taken a nose-dive.1 This means local Chinese agents are now taking their listings elsewhere.
13 major property agencies in Shanghai – banded to form the Shanghai Agent Alliance – have terminated their listings on SouFun. The Alliance makes up over 70% of SouFun’s Shanghai listings and 30-40% of all its platform listings.1
A further bevy of brokerages in Hangzhou, Henan, and Shenzhen are following suit, calling for a boycott of SouFun as well.5
Several big names involved in this feud include Centaline China, Century 21 Real Estate, Shanghai Deovolente, Bacic and 5i5j, who have cited outrageous and exorbitant price hikes by SouFun as one of the driving factors for the feud.1, 5
SouFun fees has skyrocketed ten times more within the last five years, soaring from 60RMB/month to 600RMB/month.
Deemed unreasonable and unjustifiable, other allegations by the Alliance include accusing SouFun of exploiting their monopoly of the market – jacking up prices that has spawned unhealthy competition and turmoil within the market.5
Further complicating things for SouFun is their latest move in acquiring agencies, which has left a sour taste in agents’ mouths. To take commission away from their agents effectively makes SouFun a competitor to their agent customers, who certainly don't want to give up their slice of the pie.3
The protracted trademark dispute between SouFun and Soufang.com is also a blow to SouFun. After seven years of court battles, there has yet to be a conclusion, making their troubles with local agents even more difficult.4
As a result of the trademark dispute, SouFun is now resorting to transitioning to a new name. This presents the added challenge of establishing a new brand name in the minds of Chinese consumers.
Further offshore, SouFun partner REA recently acquired 17% of iProperty Group for $99.9 million as part of their expansion plan into Southeast Asia.6
While REA states they have no plans to take agents’ commission, they’ve just jumped into bed with a property group that has now launched a Buyers Club – pulling consumers together to bulk purchase developments – which is an indiscreet step towards a commission model.
With China’s real estate landscape already fierce as ever, SouFun’s latest upheaval has truly sent tremors throughout the industry. This foreshadows what may be in store, with more portals seemingly launching products that target agent commission.
As such, agents around the world need to carefully make decisions about which marketing channels they use.
For those watching this space, we’ll be posting the latest updates as they develop here.
Sources: 1. SCMP; 2. 人民网 People.cn; 3. 鳳凰网 ifeng.com; 4. 鳳凰网 ifeng.com; 5. WSJ; 6. The Sydney Morning Herald
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