In the current environment where the Chinese property market is sluggish and affecting residents’ consumption, there is an increasing trend of property companies “voluntarily” withdrawing from community management. One of the most challenging issues is dealing with the legacy problems left by real estate developers.
Recently, “Zhonghai Property” issued a notice to withdraw from the Shuangchuang Xingxing Community in Ezhou, stating that the company will officially exit the project at 6:00 pm on August 31, 2025, ending its services.
The trigger is the low occupancy rate in the community since March 1, 2023, with an accumulated property fee arrears of 595,900 yuan, leading to long-term losses in the project, making it financially unsustainable for the company to continue subsidizing operations.
Zhonghai Property is a leading company, ranking fifth among China’s top 20 listed property management companies in 2025, sixth in terms of management scale, seventh in revenue scale, and third in profit scale.
The reasons for Zhonghai Property’s withdrawal include low occupancy rates, high proportion of fee arrears, accumulated losses, and inability to continue subsidizing operations. As of January 2025, the accumulated amount of unpaid property fees reached 595,900 yuan.
According to incomplete statistics from the Daily Economic News, during this period, over 10 property companies including Longfor Property, Jinko Service, and Zhonghai Property have issued voluntary withdrawal announcements.
Research from the Ke Real Estate Research Center reveals that since 2025, the trend of property companies voluntarily withdrawing from community service management has been intensifying.
In August, Longfor Property will withdraw from the Sudi Chunxiao project in Shanghai, Jiazhou Property will withdraw from the Longxing Future City Community project in Chongqing, Jinko Service will withdraw from the Hengchun Phoenix City project in Chongqing, and Zhonghai Property will withdraw from the Shuangchuang Xingxing Community project in Ezhou.
Public data shows that the main reasons for property companies exiting include low property fee collection, inability to maintain existing service quality, low fee payment rates, losses exceeding what the enterprise can bear, developers not paying or delaying payment of vacant property fees, and legacy issues leading to losses.
On July 7, the China Real Estate Research Institute released a report titled “2025 Summary of China’s Property Management Market for the First Half & Outlook for the Second Half.” The report indicates a significant slowdown in the development of the property management industry in China after 2021. Both property management area growth and enterprise operating income growth have significantly decelerated.
The first property management company in China was Shenzhen Property Management Company, established in March 1981. During the development of the real estate market, property services were rapidly expanded. However, with the current downturn in the property market and tightening of residents’ consumption, property companies can no longer profit as easily as before.
Financial reports from 2024 show that the average gross profit of 60 listed property management companies was 910 million yuan, a 2.2% decrease from the previous year. The average net profit was 190 million yuan, a 19.7% decrease from the previous year.
Regarding property companies voluntarily withdrawing from services, Chinese expert Wang He analyzed for Dajiyuan that this is a result of the abnormal development of the Chinese real estate sector. With oversupply of housing, plummeting prices, low occupancy rates in communities leading to difficulties in collecting property fees, homeowners are not receiving adequate services.
A resident from Zhejiang province mentioned that living in an older community means lower property fees, while upscale communities can have significantly higher fees per square meter.
In her banking job, she noted a significant increase in the number of people stopping mortgage repayments. Many regret not selling idle properties earlier due to unforeseen price drops. Despite Zhejiang being a wealthy province in China, economic challenges persist.
Chinese real estate has been in a long-term slump. Data from the National Bureau of Statistics on July 15 showed that the real estate development prosperity index dropped to 93.6 in June for the third consecutive month.
In the first half of the year, real estate development investment decreased by 11.2% compared to the previous year, new housing construction area decreased by 20.0%, and the overall unsold housing area increased, especially in the northeast region where development investment declined by 22.3%.
Consumer data from July 15 revealed a decline in restaurant income and retail sales growth rate in June. As economic conditions worsen, some property companies struggle to sustain operations.
In response, the China Property Management Association publicly listed 331 members who failed to fulfill obligations, with many issues in property management originating from developers.
Wang He pointed out that conflicts between property companies and homeowners are common but exacerbated by the current economic difficulties in China, leading to an intensified trend of companies exiting to optimize business management. He believes it necessitates effective government intervention to resolve conflicts and balance interests.
For example, Jīnbì Property’s withdrawal from the Xiashang Taohua project in Hunan was affected by delayed delivery and developer lingering problems, resulting in years of losses and operation difficulties.
Conclusively, with economic challenges impacting various sectors, the ongoing conflict between property companies and homeowners underscores the need for a comprehensive regulatory framework to address issues arising from the real estate downturn. While the situation is complex, a coordinated effort involving government, companies, and residents is crucial to navigating these challenges and ensuring a sustainable future for the property sector in China.