Illustration: Lu Ting/GT

Tie-ups look set to be the key theme for China's realty services sector this year, with two high-profile alliances in the headlines earlier this week. Words emerged Monday that Beijing-based 58.com Inc, an online marketplace backed by Internet giant Tencent Holdings Ltd, has acquired Anjuke Inc, a leading online property listing platform. In another deal, the country's major real estate agency Homelink Real Estate Agency Co will merge with Shanghai Deovolente Realty Co (Dooioo).

Both traditional real estate agencies and online platforms are smart to pursue such tie-ups, which will be crucial to gaining market share and their long-term development strategies. As for the realty services sector at large, all the signs now point to the potential for consolidation and upgrading in the years to come, as competition between traditional and online players becomes more intense amid the sluggish housing market.

58.com, often referred to as "the Craigslist of China," has been aggressive these days. Shortly after acquiring a driving school listing platform at the end of February, the marketplace announced Monday its purchase of Anjuke for a total consideration of $267 million in cash and shares. After the transaction, 58.com will set up a real estate business team to integrate both parties' property operations; while Anjuke will continue to offer services under its own brand. As 58.com CEO Yao Jinbo pledged in a letter to his staff, the acquisition will make it China's largest platform for secondhand homes and rentals in terms of visitor views, number of listings and trading volume.

The traditional realty sector also witnessed a high-profile merger this week. News broke that Homelink, the largest real estate agency in Beijing, announced its merger with Shanghai-based Dooioo, which has more than 200 outlets in Shanghai and is expected to help Homelink gain more market share in the city. Without disclosing detailed terms, an alliance statement explained that the combined company would create a large-scale online-to-offline (O2O) platform, marking an important step forward in both agencies' shift into the new marketing model.

It is under increasing pressure from the rise of Internet platforms and continued bearishness in the property market that the two traditional realty agencies decided to unite under a shared aim of moving online to restore growth momentum.

The traditional realty services sector has seen business volumes fall sharply in a cooling property market. Statistics show that last year, 14 out of 15 key cities across China recorded declines in secondhand home transaction volumes, with decreases of 41 percent, 34 percent, 32 percent and 30 percent seen in Nanjing, Beijing, Qingdao and Shenzhen respectively. Just in January, Century 21 China Real Estate's parent company was delisted from the New York Stock Exchange after its market capitalization fell below a required minimum. It had also reportedly shut down many of its outlets over the past year.

Adding insult to injury, the ascendancy of online platforms has also squeezed profit margins and market space. During the middle of last year, despite sluggish market conditions, real estate platforms like SouFun wanted to raise their online listing fees, which lead to a boycott among the country's major property agencies including Century 21, Centaline China, Homelink and 5i5j. To protect themselves from threats in the future, major agencies are now looking to build up their own online marketing channels and reduce their reliance on established platforms.

In this sense, partnering up and forging online alliances will be critical to their future survival. More similar tie-ups will likely take place in China's traditional realty services sector in the years to come.

Yet with more players taking part in the growing trend, it is still unclear how traditional agencies will proceed into the e-commerce sphere or whether they can compete with established online platforms. One can say with certainty though that traditional real estate agencies should make the best use of their biggest advantage: face-to-face services. Such services should be diversified to meet different needs surrounding property transactions, such as home management and even some financial derivative services.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn