The Real Estate Sector’s Alibaba: Wang Shi Wants to Create a Miracle

The year 2019 was a special year in the history of internet real estate transactions. The real estate transaction service market has become turbulent with property taxes.

A strong competitor, Fangdd has gradually grown into a mainstream player in the SaaS field of real estate technology.

After three years of considerations, on Oct. 9, 2019, Fangdd officially filed to go public in New York.
Public data shows that 17 SaaS companies listed in the United States in 2018, raising a total of $5.2 billion. That’s equivalent to the total amount of SaaS companies which went public from 2014 to 2017. In 2019, another three software companies, Zoom, Slack and CrowdStrike, are going public with an aggregate valuation of more than $10 billion.

1 | Young people who want to change the real estate industry
Yi Duan was born in 1977 in Shanxi as a businessman.
In 2008, the real estate industry changed significantly, with low growth rate. That year, Duan has witnessed first-hand the following problem: when the market is sluggish, the demand of customers for houses is significantly reduced, and the value of agents is also weakened. Although the real estate market rebounded in early 2009, the low transaction efficiency and high transaction costs caused by asymmetric information in the industry persisted.
The first goal of Fangdd was to publish house listings online. The platform signed an agency agreement with the developer, and then the agents who created their accounts on Fangdd sold real estate.

In 2012, Fangdd expanded to 10 cities in China and achieved a turnover of 4 billion yuan. In 2013, it expanded to more than 40 cities. In 2014, Fangdd’s innovative new house management ideas caused quite a stir in the industry.

According to public information, from Sep. 1, 2012, to Sep. 16, 2015, Fangdd completed four rounds of financing.

In September 2015, the amount of financing reached $223 million, with a valuation of more than $1 billion, and Fangdd officially entered the ranks of unicorns.

2 | "Alibaba" of Real Estate
Duan is a loyal disciple of Jack Ma and highly identifies with Alibaba’s organizational system.
Duan said that Fangdd will continue to attract real estate agents to find buyers through SaaS plus housing resources through the platform. Meanwhile, the offline service team of Fangdd will also train agencies to help them sell houses.
According to data provided by Frost & Sullivan, as of Dec. 31, 2018, Fangdd was operating the largest online real estate trading platform in China licensed by SaaS.
According to its prospectus, as of Dec. 31, 2018, there were nearly 2 million real estate brokerage firms in China. The number of registered brokers in the multi-platform platform exceeded 910,000, and the penetration rate exceeded 45%. The scale of merchants continued to grow. On June 30, 2019, Fangddd had more than 1.07 million registered brokerage merchants.

3 | Four Major Aspects: Real Estate Trading Services Society
At present, the real estate transaction service industry mainly has four modes, each with its own characteristics and problems.
The first is the traditional brokerage company with direct operation mode. Most of these brokerage companies are national chains and have a wide range of offline stores. They also have a large number of real estate agent resources as their biggest advantage.
Due to the high popularity and wide coverage of the city, large brokerage companies have a relatively high degree of internetization, and their official website and mobile penetration rate are also high. However, real estate agency services require a large number of stores. According to this standard, the direct mode is a heavy asset industry, and the expenses are high.
The second aspect is franchising. Franchise mode is mainly aimed at small and medium-sized brokerage companies. Through the franchise, this type of company can obtain more brand resources and technical services.
The management mode and operation quality of domestic real estate brokers' franchise brands are different. How to ensure the rights, efficiency and independence of franchisees is still a challenge.
The third model is a semi-open platform.
It is worth noting that there is another possibility of real estate transaction service, which is a fully open platform Fangdd.

Fangdd customizes SaaS solutions for agents and enables them to easily conduct business online, improving their efficiency and broadening the service scope. It is changing the operation mode of real estate brokers in China.
As Duan said, China's real estate service market will enter a better generation. For the real estate industry with a market turnover of more than 3 billion in the future, this will also be a great generation for the housing market.