Apr. 16 (NBD) -- Five real estate service companies, namely Ziroom, a Chinese app similar to Airbnb but for long-term rentals, Shanghai-based online real estate agency Iwjw, Mofana, China's first chained operator of apartments for long-term rentals, Internet-based property trading platform Fangdd.com, and xiaozhu.com, a Chinese booking website for short-term rentals, were included in the list of China's "unicorns" for 2017 released by the Torch High Technology Industry Development Center of China's Ministry of Science and Technology (MoST).
"Unicorns" refer to start-up companies that have a history of less than ten years but are valued as much as 1 billion U.S. dollars or more.
The above-mentioned five real estate service "unicorns" are valued at 7.33 billion U.S. dollars in total.
Alex Chen, director of strategic development consulting at Cushman & Wakefield for the eastern region of China, explained that Chinese people used to associate "unicorns" with new economy and technology. In the real estate area, the emergence of new business models raise new requirements for location, space and property, setting the stage for the emergence of "unicorns" in the real estate service sector.
Driven by the dividend brought by the housing rental policy, real estate companies are ramping up efforts to address the imbalanced and insufficient development of the property area, hence the emergence of a batch of "unicorns" in the niche sectors of O2O trading services, real estate brokerage, and co-work space, Zhang Bo, chief real estate analyst with 58 Anjuke, told NBD.
In the long run, real estate service "unicorns" are urged to improve their brand image and reputation, which then would translate into high rent premium and make renting a desirable and familiar lifestyle.
In addition to this, more sources of profits will come out endlessly, Chen said to NBD.
The increase in the number of "unicorns" reflects China's enhanced strength in innovation. These enterprises will boost the growth of new business models as well as the coordinative development of downstream and upstream industries or different industries, expected to be the one that will reshape the ecological chain of enterprises, Chen added.
"Unicorns" coming out in the past three years mostly focus on model innovation. In the future, no matter which industry gets better development, those with the best connection to new economy will win the market. Customization will be highly requested in both demand and supply sides. In Chen's view, there will be more and more "unicorns" that can serve both enterprises and individuals, such as Ucommune and Naked Hub.
A research report by Everbright Securities points out the platform economy is increasingly becoming the driving force to overthrow the traditional economic model and usher in the future business model. Real estate service "unicorns" should, on one hand, promote the asset-light operation further, boost their foothold in respective segments, and try to win favor with investors and get listed. On the other hand, while retaining the scale of operation and position in industry, they should reduce the ratio of heavy assets under their names to increase the efficiency of capital use.