Shanghai Daily reports:

UFIDA Software Co has acquired two Shanghai-based IT service providers for real estate firms to expand its portfolio in the booming house market in China, the country’s No. 1 enterprise software provider said yesterday.

Ufida spent 14.50 million yuan (US$1.98 million) to acquire Shanghai Tiannuo and Tanwang Software.

The two firms’ combined revenue was 6.43 million yuan in the first 11 months last year with a net profit of 93,300 yuan in the same period, according to a statement delivered by Ufida to the Shanghai Stock Exchange.

The two firms focus on providing product management and cost control suites.

UFIDA has an existing real estate management solution. It’s not clear how the three different software packages will be developed moving forward. In the short term UFIDA will have to keep three software development and support teams.

This comes as Shanghai’s real estate market is slowing, as the government tries to crack down on speculation and rising prices. China Daily in December, via china.org.cn:

Shanghai’s once red-hot housing market is losing its luster, as government credit controls begin to bite.

Average daily property sales since mid-November have dropped 50 percent from the first half of this year to below 600 apartments, according to the China Real Estate Index System. Only 376 apartments changed hands last Sunday, the first weekend after the central bank clarified the definition of “second” properties that are subject to higher mortgage deposits.

More than 55 percent of homebuyers have delayed purchase plans, according to a recent survey by property information firm Soufun.com.

Meanwhile, real estate developers are facing increasing financing pressure as commercial banks tighten credit. That cash flow problem is being exacerbated by the slump in housing sales because of government measures to clamp down on excessive speculation.

…”Housing sales turnover and prices have reached their peak and we’ll see a drastic slowdown of corporate earnings for real estate developers,” said Wang Shujuan, an analyst at Orient Securities.

UFIDA will certainly gain customers. Tiannuo’s clients include big real estate players such as Shimao and CapitaLand.

I don’t know if the property market in Shanghai (and elsewhere in the richer cities of China) is going to pop, hiccup, stabilize, or grow. While that is certainly a concern for UFIDA, I doubt it was a critical factor in the decision to make an acquisition.

The two software companies came cheap, about the price of 10 apartments in Shanghai. UFIDA is positioning itself for the wider adoption of information technology by the property sector. A slowdown may even be beneficial. In a sluggish property market real estate firms will look to squeeze every last renminbi from their assets. An effective property management solution would be just the ticket. Almost as easy as selling candy to a baby.

Further reading
UFIDA’s English site

UFIDA’s Chinese site

Tiannuo’s site (Chinese only)

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