Saying goodbye to "fighting for land and territory," property companies withdraw and seek change

Industry insiders believe that this adjustment trend will continue over the next 2-3 years.

For a long time, there has been project turnover within the property management industry. Property management companies each year have cases of withdrawing from managing some projects, which is also a normal cycle of market rotation. But this situation has gradually changed, and in recent times, more and more listed property companies have started to proactively “withdraw from the site.”

According to a third-party consulting firm, CRIC Property Management, against the backdrop of the industry continuing to optimize its project structure and proactively exiting low-quality and low-efficiency projects, among 50 listed property companies, the overall growth rate of managed scale further declined by 1.4 percentage points compared with the same period last year, and scale expansion is shifting in an all-round way toward another direction.

Industry insiders believe that after the industry bids farewell to the era of “seizing territory wherever you can,” listed property companies, by withdrawing proactively, will refocus resources on projects with high profits and high potential, thereby driving strategic adjustments. This also marks that the property management industry is moving away from the era of extensive growth that relied on broad urban coverage, entering a new cycle of refined operations characterized by intensive and professional management.

Proactive withdrawal

“Proactive exit” can be considered the “annual buzzword” in property companies’ 2025 financial reports.

“In the face of the group continuing to optimize its business structure and carry out governance of loss-making projects, and by balancing the trade-offs between scale and efficiency, the expired/withdrawn projects amount to 55.6 million square meters.” China Overseas Property disclosed this in its 2025 performance report. This withdrawal scale increased by about 25% compared with 2024.

At the same time, Country Garden Services terminated managed area of more than 60 million square meters; Yongsheng Services withdrew from a signed area of about 42 million square meters; Sunac Services has accumulated a total of 59 projects that withdrew and projects already decided to proceed with withdrawal; Oceanwide Services saw a decline in scale because of proactive withdrawal of some projects, with the managed area decreasing by about 3% year-on-year…

Such proactive adjustments are no longer measures by individual enterprises, but have become an industry norm. According to CRIC Property Management statistics, in 2025, 50 listed property companies disclosed their managed scale; their total managed area was about 7.51 billion square meters, up 5.3% year-on-year. This growth rate further fell by 1.4 percentage points compared with the same period last year. The institution believes this reflects the industry’s current trend of continuing to optimize project structure and proactively exiting low-quality and low-efficiency projects, with scale expansion comprehensively shifting toward caution and demands for high quality.

In fact, some property companies’ large-scale withdrawal actions began as early as the past two years.

According to disclosures, in 2023, Greentown Service’s withdrawal area reached about 38.8 million square meters, a significant increase of more than 175% compared with the same period of the previous year. The withdrawal area in 2024 was also above 36 million square meters. Although full-year 2025 figures were not disclosed, the withdrawal area in just the first half already reached 17.3 million square meters, up more than 5% year-on-year. In 2024, Wanwu Cloud exited 53 residential projects throughout the year, and Shimao Services also withdrew from 60.9 million square meters, among others.

Not only did they shrink managed projects; some companies also adjusted their reserve projects to prevent future risks. For example, in 2025, Greentown Service proactively withdrew from some reserve risk projects in non-core cities and those with delivery risks, resulting in its reserve area decreasing by more than 7% year-on-year in 2025.

Overall, CRIC Property Management statistics show that among 38 listed property companies that disclosed contract area, the total contract area increased by only 1% year-on-year, and the growth rate fell by 2 percentage points compared with the same period last year.

When management teams of multiple property companies discuss withdrawal from projects, they describe these withdrawals as low-efficiency or low-quality. Their core criterion is whether they cannot achieve a turnaround to profitability.

“The key judgment standard for exiting low-quality contracts is that the project has been loss-making for two consecutive years and the cash flow is negative,” Sunac Services’ management candidly stated at the 2025 performance meeting. At the same time, they assess the reasons for the losses, such as customers’ price reductions, high costs, low collection rates, and the effectiveness of improvement measures: “If we are unable to achieve loss reduction and a turnaround to profitability, or if cash flow cannot be improved, we will decisively exit.”

Country Garden Services’ management also said that in early 2025, they assessed on-site resource allocation for some loss-making projects and formulated turnaround plans and targets on a project-by-project basis, with the aim of changing the operating situation. “We will not easily give up any project,” but if, after comprehensive evaluation, it is found that “there is no way to reverse the overall project’s operating fundamentals through various means, then we will choose to proactively withdraw.”

Wanwu Cloud also established a special governance team for past accumulated loss-making projects. It drew on the 2025 flexible pricing logic to reach a consensus with customers on “value-for-money.” But “if, despite efforts, we still cannot reverse the losses, we will make a decisive exit.”

In Peng Yu’s view, Deputy Director of the Property Business Division at the China Index Academy, in recent years, property companies’ proactive withdrawal from projects—this shift—marks that the property management industry is gradually entering a new cycle of high-quality development with “quality and efficiency first,” moving from a stage of extensive expansion. This is not a simple strategic contraction, but a rational return and proactive optimization under multiple pressures within the industry.

Adjustments continue

Since 2015, affected by the rapid growth of the upstream real estate industry and the boost from capital markets, the property industry had long followed the development logic of “scale comes first.” This has also planted the groundwork for the current industry adjustment, triggering the pain of transformation during the current transition.

CRIC Property Management points out that during the period of rapid industry development, many property management companies, in order to capture market share and expand scale, took on a large number of projects that were deficient from the start. These projects were either priced too low, had inadequate supporting facilities, or had prominent outstanding issues left by developers, and they were in a loss-making or marginal-profit state from the beginning.

An insider from within a property management company once told reporters that in rolling development projects, there have been cases where some buildings become stalled/unfinished. A residential community may have legacy issues such as gas, water, and electricity not being connected, roads not yet completed and repaired, and so on. After entering the site, it may be necessary to first front the money to repair, and it may also face situations where owners refuse to pay property management fees. At the same time, the high vacancy rate caused by overdevelopment has also become a key factor affecting the collection of property fees in the past two years.

“During a period when the real estate market was booming and industry profit margins were relatively large, companies could offset losses from these ‘problem projects’ with returns from other high-quality projects,” the above institution said. In the macro downturn cycle where profit margins shrink, the “inherent shortcomings” of these projects have been exposed.

The financial pressure faced by these projects has become the direct driver for property companies’ current proactive withdrawals. Peng Yu said that in 2025, the average property fee collection rate among the top 100 property companies fell to 87.32%, and the decline in the collection rate is even more obvious in some low-efficiency projects. With project labor costs and the operating and maintenance costs for public facilities staying high, some projects fell into losses, and therefore property companies actively chose to withdraw from such projects. At the same time, exiting low-efficiency projects helps improve property companies’ operating efficiency.

CRIC Property Management states that property companies today are not simply shrinking their business; rather, they are shifting from “scale expansion” to “specialization and deep cultivation,” improving the operational density and market share in core areas.

Specifically, in terms of spatial approach, companies no longer pursue breadth of coverage, but pursue regional concentration. For example, Greentown Service has shut down third-party private enterprise cooperation since 2021, and the number of covered cities has shifted from more than 200 at its peak to focusing on and cultivating 56 core cities today. Yongsheng Service’s covered cities have also been optimized from more than 120 originally to 70-80 major cities.

In terms of strategy for new expansion projects, risk bottom lines are also tightly controlled to ensure project profitability. For example, Sunac Services does not pursue outward expansion at this stage. “When obtaining new projects, we will follow the company’s overall quality bottom line, including quantitative comparisons of basic data such as profit and gross margin, as well as assessments of the lead party’s receivables and pledged funds.”

On the operational level, they also improve labor efficiency by achieving high-density coverage in physical space to dilute management costs. CRIC Property Management data shows that in 2025, the managed area per city for listed property companies increased to 1.69 million square meters, up about 7% year-on-year; the density effect has already begun to appear, and the industry is steadily moving toward a new stage of high-quality operations.

Peng Yu believes that this adjustment trend in the industry is expected to continue over the next 2-3 years. In the short term, the strategy of “trimming and improving quality,” focusing on high-value core projects and regions, will continue to deepen. In the long term, competition in the industry will shift from being driven by resources to being driven by capabilities, ultimately forming a new pattern centered on service quality, technological application, and ecosystem integration. By proactively exiting low-efficiency assets, leading companies aim to consolidate their financial foundation, building strength for future sustainable growth and differentiated competition.

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Responsible editor: Liu Wanli SF014