Property companies are also going to be GPs now

During the transformation period of real estate, property companies are bringing a different imaginative space to the outside world.

Wall Street News learned that at the recent ONEWO Insight Conference, ONEWO and HiPhi Capital announced a strategic cooperation, intending to jointly establish a community business fund to incorporate stable assets.

In other words, property companies, which many people perceive merely as community service providers, are participating in asset operations as asset operators and GPs (referring to the management institutions or individuals of equity investment funds).

Su Xin, the executive partner of HiPhi Capital, stated that the rules and dynamics of urban development have changed, and the cyclicality of commercial real estate is gradually becoming apparent. Real estate needs to transition from manufacturing to service.

HiPhi has discovered that there are not many types of assets that meet the criteria of sustainability, scalability, and stable cash flow, while community commerce, which has huge potential, aligns perfectly with HiPhi's interests.

HiPhi Capital has made many attempts in the community business sector. In 2022, it focused on seemingly inconspicuous community businesses such as street-side supermarkets and community vegetable markets, establishing the first domestic fund dedicated to investing in community commerce, with a total scale of 1 billion RMB.

Ye Fei, the deputy general manager of ONEWO, pointed out that the "in-store" consumption types carried by community commerce are the most frequent and sticky consumer content on the C-end, closely related to the community; community commerce has a low dependency on chain brands, thus possessing strong risk resistance. The community business and property management business have high synergy, potentially creating a high-barrier business model.

Currently, as most first-tier and 1.5-tier cities in China have entered a relatively mature stage of economic development, the proportion of service consumption will continue to rise, aligning with the business format configuration and service radius characteristics of community commerce; community commerce characterized by convenience, service, proximity, and cost-effectiveness will become the mainstream of consumption.

Data shows that small-scale community commerce in China accounts for less than 30% of total social expenditure; in contrast, the proportion in Europe and the United States is over 60%, indicating that the community commerce market in China still has significant potential to be explored.

Whether from a higher dividend rate or a large market scale, community commerce holds great appeal for insurance funds or institutional investors.

Su Xin further pointed out that the advantage of community commerce lies in meeting the essential needs of ToC, generating stable cash flow, and being a strong asset allocation with risk resistance. However, the current operation of community commerce requires a 2.0 version, which simultaneously meets the basic needs of the community in terms of space, business format, brand, and service, and can form differentiated products within the region.

ONWO has already achieved results in the pilot transformation of community commerce. In Fuzhou's Jianxin South Die City, it achieved a year-on-year increase of 51% in customer flow in terms of customer attraction, efficiency improvement, and cost reduction; in terms of co-creation and operational quality improvement, it achieved a year-on-year growth of 30% in membership numbers.

This has led to a perfect match between ONEWO and HiPhi Capital. This cooperation further indicates ONEWO's transformation from traditional property services to asset services. The "Die City + Community Business" ecosystem is expected to accelerate its implementation.

Ye Fei stated that by leveraging the foundation of Die City and ONEWO's operational capabilities, it will link assets, brands, and consumers to accelerate the internal circulation of living consumption within Die City This is also a collaboration that aligns with the changes of the times. From an industrial perspective, in the era of stock, the property management industry will face: the trend of specialized service development; the direction of diversified business expansion; and the broad application prospects of intelligent technology. Whether it can seize this industrial transformation and upgrading will be crucial for the future development of the property industry.

This capital entry into community commerce will empower the new business model of the property industry. As Ye Fei hopes, a high-efficiency service network will be established to link community commerce.

Su Xin stated that Gaohe Capital is confident in the community commerce strategy and will further deepen its engagement in the community commerce track through strategic cooperation with ONEWO.

Today, the strategic cooperation between ONEWO and Gaohe is a metaphor for the real estate transformation entering the second half and the rise of new business models. As various forces compete, the real estate industry is also presenting itself to the world in a brand new posture.

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