KE Holdings, the company behind Chinese market leading portal and transaction platform Beike, has released its report on Q3 activities. Unsurprisingly given the turmoil experienced in the Chinese real estate sector over the last few months, revenues were down while net profit over previous quarters turned to a net loss of $274 million.
KE Holdings is the largest portal operating company in the world and undoubtedly also one of the largest brokerage firms in the world by gross transaction volume as well ($536 billion in 2020). The corporation owns and operates the market-leading Beike portal which last year had 3.7 million authenticated existing property listings and is involved in several other adjacent business areas.
The Chinese real estate sector has been suffering over recent months with the more lucrative primary market being dragged down by the well-documented debt problems facing the nation's largest developer Evergrande. In October new construction starts fell 7.7% year-on-year and the 0.2% drop in new home prices was the largest seen since 2015.
KE was forced to lay off staff from its financial products division in October as market forces began to bite and company Chairman and CEO Stanley Yongdong Peng admitted that results had been affected by "broad macroeconomic challenges"
"The third quarter was challenging and difficult for the industry with corrective and sweeping adjustments to safeguard and bring about a long-term healthy development of the real-estate market in China."
Beike operates a commission-based business model whereby agents sign up to list exclusively on the portal and pay a percentage of any resulting transactions. The company also operates the Lianjia brokerage and operates physical stores. Numbers of both listing agents and physical storefronts operated took a hit during the third quarter along with user numbers.
Online Marketplaces understands that the company has been shifting resources internally towards the furnishings division (Beike bought home renovations company Shengdu for $1.2 billion in July) with management seeing an opportunity to eventually involve the brand not only all home purchases but eventually all purchases made for the home as well.