SouFun faces protest over listing prices

Property agencies pull information off website

A total of 13 major property agencies in Shanghai Tuesday took off housing information they earlier posted on the website of real estate portal SouFun Holdings Limited in protest to an increase in listing charges, a move analysts said can cause immense damage to SouFun.

SouFun's prices for property agencies have increased 10 times in the past five years while property agencies' service fees have remained almost unchanged, according to a news release from Centaline Group's Shanghai branch, one of the 13 property agencies, sent to the Global Times Tuesday on behalf of the protesting agencies.

In the first quarter of 2014, despite a cooling real estate market, SouFun's revenue from housing information listing services surged by 57.1 percent year-on-year to $42.1 million, according to the US-listed company's first quarter earnings report released on May 7. The company is scheduled to release second-quarter earnings on Thursday.

Property agencies have been spending more on online listings and promotion in recent years but they are also more sensitive to costs in a slowing real estate industry, Li Zhanjun, research director of the Shanghai-based E-house China R&D Institute, told the Global Times Tuesday.

The protesting agencies claimed that SouFun's jump in listing services revenue comes from surging charges because SouFun continues to promote new service packages which rank property information by listing fee rather than the housing quality and price, according to the news release.

The dispute between SouFun and property agencies is not limited to Shanghai but is spreading across the country. Agencies in 30 cities, including Beijing, Shanghai and Hangzhou, launched a joint protest against SouFun over the high charges in June, the news release said.

On May 29, nine property agencies in Hangzhou, capital of East China's Zhejiang Province, which account for more than 80 percent of the local second-hand property market, together took off their housing information from SouFun's website, news portal qq.com reported Tuesday.

Afterwards, property agencies in other cities also formed alliances to protest and negotiate with SouFun on listing charges, the report said.

To resolve the conflict, SouFun launched a program called "support plan for partners" in June and promised to lower charges from August 1, the news release said.

In addition to the program, SouFun also bought a 10 percent stake in Shenzhen WorldUnion Properties Consultancy Co and 14.8 percent stake in property agency Hopefluent Group Holdings Ltd in July, media reports said.

However, SouFun broke its promise and promoted a high-price package to a few agencies, the news release said, accusing SouFun of "disrupting the market," which led to the joint resistance.

If the agencies keep their housing information off SouFun's website, SouFun will be under huge pressure and may suffer a sharp drop in revenue, Pang Yiming, an analyst with consulting firm Analysys International, told the Global Times Tuesday.

About 30 percent of SouFun's income comes from second-hand property business, which is mainly occupied by property agencies, therefore, if more agencies unite to renounce SouFun, it will be a huge setback for the website, she noted.

Moreover, advertising revenue may also drop if the number of website visitors declines with less second-hand housing information, Pang said.

Analysts suggested SouFun solve the dispute with property agencies through negotiation at a time when the whole real estate industry is in downturn, or the portal will lose market share to other similar property information websites, and even some online marketplaces such as 58.com.

China's housing market has slowed this year as sales and prices have dropped in their biggest pull-back in two years.

SouFun could not be reached for comment by press time. Its share price dropped 4.41 percent by 11 am on Tuesday (US time).