Sector: Real estate
Industry: Property technology industry (PropTech)
Fangdd Network Group Ltd. is China’s largest online real estate marketplace. It operates an online platform connecting real estate agents with customers in China. Powered by cloud and big data, FangDD.com features property listings nationwide and facilitates related transactions with various smart business tools and resources. Its database lists homes for rent or sale, as well as those not currently on the market.
Fangdd describes its tech-driven platform as “agent-centric,” acting as a one-stop shop for completing real estate transactions. It aims to solve the issues of China’s fragmented real estate market by providing accurate property information and easy business management for agents, optimizing their efficiency with analytics. Agents on its platform, which reached 1.07 million in June 2019, are ranked based on user ratings and sales. The company acts as an independent party and does not employ any real estate agents.
Founded in 2011, Fangdd has enjoyed fast growth, generating revenue from commission and value-added services. In the full year 2018, its revenue was $332.4 million, up 27% year-over-year. Net income reached $15.2 million compared with about $85,000 in 2017. For the first half of 2019, Fangdd reported revenue of $233.7 million on income of $14.6 million.
Fangdd said it continues to broaden its revenue sources and aims to expand the portion of non-commission-based revenue. For 2018, it reported revenue from innovation initiatives and other value-added services of $36.1 million, up 69% year-over-year. For the six months through June 2019, revenue from that sector decreased 43% y-o-y to $9.8 million, which Fangdd attributed to an adjustment in its strategy. It said it has encouraged faster sales of properties instead of selling at higher prices, a strategy which raised commission-based revenue.
By December 2018, Fangdd served 45% of China’s 2 million registered real estate agents, more than any other platform of its kind in the nation. Fangdd’s database of verified property listings also outperformed those of other real estate platforms, featuring 131 million homes by June 2019. This data was supported by U.S. market research and consultancy firm Frost & Sullivan.
China’s residential property market is expected to grow at a compound annual growth rate (CAGR) of 9.2% from 2018 to reach 33.4 trillion yuan by 2023, according to Frost & Sullivan. Commission revenue from home sales is expected to rise at a CAGR of 22.6% to 343.6 billion yuan by 2023, the consultancy reported.
Early on, Fangdd has been backed by Shanghai-based private equity fund Vision Knight Capital. The head of the fund and former chief executive of Alibaba Group Holding Ltd. (NYSE: BABA), David Zhe Wei, is now a director on the board of Fangdd.