Chinese TikTok eyes real estate?
Discussions around ByteDance’s (parent of viral short video app TikTok and its Chinese sister Douyin) appetite for China’s real estate have resurfaced with the emergence of a housing agency known as Xiaomai Real Estate in September. Starting in Fuzhou, the capital of the South-eastern province of Fujian, which is also a sprawling industrial and transportation hub, the new chain’s service is set to come to the neighbouring city of Xiamen, Lanzhou in Gansu province and Foshan in Guangzhou in the near future, according to the Chinese technology media outlet Tech Planet.
The new housing agency is under a Beijing real estate company, of which ByteDance owns 100% of the shares following an acquisition which marked a milestone for ByteDance’s expedition into real estate. Instead of directly operating, ByteDance will offer digital solutions through its owned property information platform Xingfuli – a product transformed from a property news channel of ByteDance’s news content arm Toutiao following the tech giant’s early interest in the housing market in 2018.
The Xingfuli app coordinates housing and house buyer resources for physical outlets and has been embedded in the video platform Douyin, providing content including luxurious house views, property purchases and interior design advice.
“The Xingfuli app was initially designed to fend against China’s biggest online property agencies such as Beike and Anjuke,” said Liang Xuewu, founder of the Chinese real estate group Hong’ao who has over 18 years’ experience in the industry. “Prior to 2020, Douyin had pushed hard for the growth of Xingfuli, providing traffic support and even limited searchability of other alike accounts. But since March 2021, Xingfuli app has integrated with Douyin, and the platform has lifted restrictions on other creators, resulting in an increase in housing content,” Liang added.
A property crisis on the horizon…
However, regardless of Douyin’s interest in real estate, the sector has been anxiously seeking a lifeline online amid what has been called a “freefall” in China’s property market. The country’s property sales between January and May 2022 plummeted by 31.5% year on year, a combined result of the pandemic since 2020, and the lingering impacts of the government’s earlier restrictions on property purchase in an effort to discourage speculative investment. The fallout worsened following the Evergrande crisis last year when the country’s second-largest property developer was declared a default.
Public sentiment appears to remain sceptical about the market despite dozens of local authorities stepping up to ease house purchases this year, including a Henan-based property conglomerate that accepts wheat as housing down payment and Zhengzhou (capital of Henan province) becomes China’s first megacity to scrap household registration for non-locals in an attempt to support the local real estate market.
Hope arrives for anxious realtors
In light of the continued downturn in real estate, realtors believe China’s short video sensation could be a salvation for the sector. “Short videos provide opportunities for small and emerging businesses. This gives hope for the industry,” said Liang. Ironically, as more agents from China’s leading property developers tap into Douyin’s “house market”, the platform has been pushed to respond saying “Douyin does not support property trading, nor is it qualified for such practice.” However, what Liang values from Douyin is its community ambiance that helps agencies establish trust with potential home buyers, rather than viewing it as a market space.
In fact, cultivating an intimate relationship with audiences online appears to be of growing importance in real estate and realtors specialising in different house styles have also started looking beyond Douyin for a digital space where its users’ interests are deemed more compatible with their offerings. For example, those of the cultural and tourism property category are gradually shifting to Xiaohongshu, China’s largest lifestyle-sharing platform that also houses the country’s biggest Gen Z hipster community. This was observed by a former staff member at Centaline Property Agency Hong Kong.
Meanwhile, Douyin’s rival Kuaishou also rushed into the online property battlefield with its e-commerce unit launching a real estate centre earlier this April. Guided by the ambition of hitting an annual GMV of 10 billion RMB ($1.4 billion), the new service centre is responsible for directly negotiating contracts with developers, and plans to turn its existing real estate KOLs, agents and consultant content creators into its signed live streamers, producing live broadcasts of house viewings with training and traffic support.
The “live stream property sale” seems to be playing out well for Kuaishou, according to Ji Xinju, head of the new business unit, Ideal Home at Kuaishou, “The average sale conversion rate of Kuaishou’s property live streamer is between 20% and 30% and those with a big following can expect a rate of up to 50%,” said Ji. One latest example is Hongqi, Kuaishou’s star realtor live streamer who is reported to have clocked 1.5 billion RMB ($211 million) in sales, after selling more than 1,600 houses in 10 months.
The result comes from the online market boom in the past 12 months, which brought out a growth rate of 40% in real estate content creators with over 10,000 followers, as per Kuaishou. With its initial fruition, the video platform is set to expand the footprint of the Ideal Home live stream initiative in the hopes of bringing a spark to the real estate sector in at least 30 Chinese cities in the coming years.