China's Ke builds hope for hard-up developers

Hong Kong

KE'S success selling homes is building the wrong kind of attention. The US$77 billion Chinese real estate broker's adjusted net profit more than tripled last year, despite Beijing's hawkish tone on frothy prices.

Its shares are trading more than 200 per cent above the price set in its August initial public offering in New York and value the company at more than US peer Zillow and Australia's REA combined.

But hard-up property developers inspired to muscle in on the action might be disappointed.

The Tencent- and SoftBank-backed company offers sales, rentals, renovations and loans to customers on- and offline. With a system similar to the Multiple Listing Service database built in the US which relies on the cooperation of real estate brokers, KE boasts half a million agents from nearly 300 brokerages. Purchases of new homes through KE made up around 10 per cent of China's total sales last year, Breaking Views calculates.

Big developers are trying to replicate the model. They are desperate to diversify and build new income streams as official curbs on leverage ratios crimp their core business.

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Evergrande is partnering with 21 million brokers across China to transform its online home-selling app into one that markets third-party properties alongside its own and will even flog new and used cars, according to Chinese publication Yicai. REUTERS