City Developments (CDL) is investing 100 million yuan (S$20.3 million) in a 20 per cent stake in Chinese online apartment rental platform mamahome.
The move by subsidiary CDL China comes about a year after CapitaLand's serviced residence arm Ascott poured $67.69 million into Chinese apartment-sharing online site Tujia.
"Clearly, both developers are trying to embrace technological changes in the real estate industry," Mr Wong Yew Kiang, senior research analyst at CLSA said yesterday.
"While it's difficult at this point to quantify such moves in terms of expected earnings, it also would not be the right strategy to completely reject these changes."
Mamahome is a "one-stop solution" for both apartment owners and rental customers, CDL said in unveiling the deal yesterday.
It provides a booking website, online management software and other value-added services, including housekeeping, renovation, 24-hour concierge and call centre. It also provides management for its own brands of serviced apartments - Suisse Place, Locca and Login.
"Mamahome caters to the rapidly growing demand for mid- to long-term leasing from leisure travellers to business executives on assignments and postings," CDL said.
More than 100,000 apartments are listed on the site, spanning more than 20 cities in China. Over 75 per cent of these apartments are in key cities, including Shanghai, Beijing and Guangzhou.
After CDL's investment, mamahome will be held jointly by founder Shanghai Chongfu (56 per cent), financial services firm E-House Capital (24 per cent) and the balance by CDL China.
"Our partnership with mamahome provides an immediate entry into a fast-growing sector... It will contribute to future long-term recurring income streams to CDL," Mr Mark Yip, CDL chief marketing officer and CDL China chief executive, said in a statement.
Mamahome operates under an asset-light model, with a focus on Internet expansion, "representing an efficient manner to grow market share", Mr Yip noted. "(It) can also serve as a good platform to enhance leasing efforts for the group's residential leasing properties and serviced apartments."
Mamahome could help CDL China package its residential properties more attractively for investors, said Mr Derek Tan, DBS vice-president for group equity research.
Property investors could tap on the site to elevate the visibility of their properties, for example.
Mr Tan said that while these online platforms function as marketing tools, the impact on financial performance remains to be seen.
For example, Ascott's investment in Tujia comes as Ascott already has an online reservation network, so it is not yet clear how much business is being generated.
Still, the new business model would be a good fit for CDL's Chinese properties, which are concentrated in prime areas of the gateway cities of Chongqing, Shanghai and Suzhou, said Ms Mireille Wan, founder of MDW Consultancy. These properties would be more able to attract business and leisure travellers, she noted.
"The model bodes well for the group's performance, as CDL can generate recurring income from their physical assets that would help boost the bottom line," she added.