On January 25, Landsea Green Life submitted a prospectus to the Hong Kong Stock Exchange. It is the fourth property management company to submit a prospectus in 2021 and the second one to submit a prospectus in the Yangtze River Delta area this year. By the end of January 2021, seven property management enterprises, with GFA under management ranging from 10 to 20 million m2, had planned to be listed. Guided by the capital investment trend, more property management enterprises with high growth potential will accelerate financing in 2021.
But the first problem facing many property management enterprises is to rapidly highlight the competitiveness of differentiated services among peer enterprises. Due to a close relationship with Landsea Green Properties and rich experience in green building services, Landsea Green Life has established a differentiated label for green building property services in the industry and has a strong first-mover advantage in the field of green building property services and operations against the background of accelerating green development in China.
The Country Requires a Higher Ratio of Green Buildings, Creating a Large Development Space for Property Management Enterprises Serving Green Buildings
The past decade has been an era of rapid development and an important stage for reforming the ecological civilization system and implementing the concept of green development in the country. In the real estate development market, all sub-sectors are striving to realize achievements in green building construction. Various policies, guidance, and suggestions have been issued.
According to the National Plan on New Urbanization (2014-2020) issued by the National Development and Reform Commission (NDRC) in 2016, the gross floor area (GFA) of urban green buildings is required to account for 50% of the GFA of new buildings by 2020, while the target in 2012 was only 2%.
In 2019, the NDRC issued the Action Plan for Green Life Creation. The Action Plan states that the GFA of urban green buildings should account for at least 60% of the GFA of newly developed properties by 2022.
The Action Plan for Green Building Creation, issued in 2020 by ministries including the Ministry of Housing and Urban-Rural Development and the NDRC, requires that the GFA of new green buildings should reach 70% of that of new urban buildings in 2022. The GFA of star-level green buildings should continue to increase.
The green building field in China has ushered in much room for development since 2016. In 2020, the country proposed increasing the proportion of new green buildings to 70% by 2022, which is an increase of 20 percentage points from the earlier development target. Green buildings are booming. The demand for green building service and operation providers is increasing rapidly. But there is a shortage of property management enterprises that can provide such services. Currently, enterprises that are capable of providing comprehensive and systematic property management services for green buildings mostly consist of property management enterprises that are deployed by their parent companies to provide services for their own green buildings.
Benefitting from the green differentiation strategy focusing on green buildings and its close relationship with Landsea Green Properties, Landsea Green Life has accumulated rich experience and developed professional service capability in providing property management services for green buildings. By the end of September 2020, Landsea Green Life had 117 projects under management, 35 of them are green building projects, accounting for 34.1% of the total projects under management and ranking in a leading place among the Top 100 Property Management Enterprises in China. In terms of single project operation, the company obtained the first global BIU V6 residential project certification in 2020, showing that the company has strong market competitiveness in providing property management services for green buildings.
In future, as the proportion of green buildings among new buildings nationwide continues to increase and green houses and healthy lifestyles are gradually becoming the mainstream trend, Landsea Green Life will become an important property management service provider for green buildings. While addressing the pain points of soaring service needs, the competitiveness of enterprises in expanding business in the field of green building services has become increasingly prominent and their development potential will continue to be tapped. After entering the capital market, the brand awareness and influence of Landsea Green Life will increase, which will provide further feedback for the company and enhance its competitiveness in green building services and achieve high-quality two-way linkage between business and brand.
Cultivate the Most Potential Development Areas to Maintain Continuous Innovation Vitality
On the real estate supply side, Landsea Green Life follows the strategic steps of Landsea Green Properties, has a forward-looking business plan, and continues to cultivate the green building property service market. It also has a development advantage in the regional market. It was established in Nanjing and developed in the Yangtze River Delta area, which is one of the regions with the most active economic development, highest degree of openness, strongest innovation capability, and most developed service sector. As an important part of the modern service industry, the property service sector fully enjoys the huge dividends of regional development.
Since the announcement of "the national strategy of supporting the integrated development of Yangtze River Delta area" at the first China International Import Expo in November 2018, the region has ushered in an era of rapid development. Property management enterprises have also expanded their markets in the Yangtze River Delta area since 2018. According to the data on listed property management enterprises, there were 115 mergers and acquisitions announced by listed property management enterprises from 2018 to 2020, among which 51 happened in the Yangtze River Delta area, the most active region in terms of mergers and acquisitions announced by these enterprises.
When other property management enterprises realized that they needed to focus on expanding businesses in the Yangtze River Delta area, Landsea Green Life was already deeply engaged in the region and had completed regional brand penetration and gradually formed a service barrier in the regional market. According to the prospectus of Landsea Green Life, the number of projects in the Yangtze River Delta area has continuously increased since 2018. Among the 117 projects under management at the end of September 2020, 99 were located in the Yangtze River Delta area, accounting for 87.1% of the company's GFA under management.
In terms of the regional income, projects in that region contributed 80% of the total income of Landsea Green Life. Notably, the company successfully entered the property management service market in Anhui Province in 2020, which constituted further expansion in the region. In addition, the project revenue in Zhejiang Province from January to September 2020 increased by 124.5% compared with the same period in 2019, showing the company's capability to create value in the regional property management service market.
In the context of developing green ecology and enhancing the integrated development of the Yangtze River Delta area, the Guidance Catalog of Industrial Development in the Demonstration Zone for the Ecological and Green Integrated Development of the Yangtze River Delta and the Admission Standards for Industrial Projects in the Pilot Zone of the Demonstration Zone for the Ecological and Green Integrated Development of the Yangtze River Delta (for Trial) were successively issued in 2020. Both of the documents pay great attention to green ecological construction.
Green buildings in the real estate market have become the main theme of China's future. The property management service of green buildings has hugely increased its market space. Landsea Green Properties closely follows the national development route and always upholds the concept of green building development. Landsea Green Life has inherited the green gene of Landsea Green Properties and is one of the few companies that can accurately undertake green building services and operations. The increasing need for green services will bring high-quality scale growth for Landsea Green Life, whose development potential will continue to be tapped in the future. Meanwhile, continuously increasing demands for services in the capital market will also bring plenty of imagination space for the company.
Source: Jiahe Family Property Service Research Institute