From food delivery to babysitting, Chinese home builders turn to ‘butler’ services to boost revenues amid weak sales

Pearl Liu
·4-min read

Traditionally, Chinese developers have offered little more than security and maintenance services to the residents of their projects once the cranes and diggers have moved on.

But after 2014, when the authorities removed price controls on property management fees, more home builders began offering extras like takeaway food and grocery deliveries, gardening and laundry services.

Seeing the income from their sideline businesses growing, the likes of Country Garden Holdings and Poly Development and Holdings began to spin off their property services units and get them listed independently on the stock market.

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Now, with the threat of Covid-19 infection keeping more people indoors, indebted developers are relying more and more on these so-called butler services as a revenue stream to help them through tough times. Some have even branched out into offering babysitting and beauty treatments to boost the appeal of their developments.

With the government signalling its intent to support the sector, and investors starting to take notice, a new breed of services provider is starting to emerge, with well educated staff providing a broader range of services.

“We are hiring university graduates for our butler jobs and they will take training and exams to get qualified as chief butler, master butler, specialist, and so on,” said Ye Mingjie, president of Shimao Services Holdings, the services arm of Shimao Group Holdings, one of China’s biggest home sellers.

“Each chief butler leads a team whose duties span everything from security and cleaning to repair, maintenance and other services to take care of up to 50 families.

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“And we are now looking to value-add services, for example, hiring professional teachers to babysit our residents’ children after school.

“We see rising demand for a more qualified living environment, particularly after the pandemic outbreak.”

Hygiene and safety are taken just as seriously as training. Shimao’s butlers have their temperature taken every day upon entering a building, and equipment is sanitised every couple of hours.

Shimao Services has saved about 100 million yuan (US$15 million) this year on the back of a government tax rebate and cost-cutting incentives, said Ye.

Such supportive policies from Beijing often signal the country’s willingness to nurture a particular business sector, which in turn tends to spur capital flow into the industry.

President Xi Jinping himself appears to favour the sector, writing an open letter to a service-oriented private company in Henan province’s Zhengzhou in May, which referred to the cleaners and doormen as “heroes coming from the ordinary people.”

Stock investors have recognised the potential growth in the industry.

“We were not the sweetheart of investors before. But now with more favourable policies from the government, for example tax rebates, the capital market is paying us some attention,” said Ye.

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Shimao Services mopped up about HK$9.8 billion (US$1.26 billion) of funding through a Hong Kong listing last Friday.

It aims to generate revenue of 4.5 billion yuan this year and 8.1 billion yuan next year, which represents a small but expanding slice of the group’s business; home sales generated by the parent company brought in revenue of over 111 billion yuan last year.

Country Garden, China’s second biggest developer, listed its Country Garden Services spin-off in Hong Kong in 2018, while Poly Property Services, controlled by state-backed home builder Poly Development listed there a year later.

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The property management arms of the mainland’s fourth-largest developer, Sunac China Holdings, and its most indebted developer, China Evergrande, are both poised to raise at least US$1 billion via stock listings by the end of the year, according to people familiar with the matter.

China’s property managers are expected to oversee gross floor area exceeding 33 billion square metres by 2030, according to Pingan Securities. That is about 30 times the size of Hong Kong.

The average stock price of some 30 property management companies listed in Hong Kong surged by 68 per cent between January and August this year, though a 30 per cent correction followed as retail investors’ attention swung towards mega IPOs like that of fintech giant Ant Group.

“Our parent group has always done a good job in terms of deleveraging. The listing of our service arm can further cut our debt ratio and increase the group’s market value, which offers much more room for Shimao to further develop,” said Ye.

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