China's property management sector faces crisis as fees go unpaid

Chinese property management companies are struggling to collect service fees from dissatisfied homeowners, a situation that is shrinking revenues and threatening property values. This growing problem is adding pressure to local governments already grappling with an economic slowdown.

Many homeowners are either delaying payments or refusing to pay altogether. Some cite an inability to afford management fees amid economic headwinds, while others are using non-payment as leverage to force companies to lower service charges. As management providers withdraw from contracts, residential areas are experiencing a decline in infrastructure maintenance, uncollected waste, and unattended security posts.

Investors who bought multiple properties before the 2021 market boom are particularly affected. With falling home prices and uncertain returns, they see little reason to continue paying management fees. This issue is compounded by decades of overbuilding, leaving many residential complexes with a significant number of unoccupied units. Developers with financial difficulties are often failing to pay management fees for their unsold apartments.

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This is a big and quite unique problem that has not appeared in previous real estate crises.

Data from research firm CRIC shows a sharp decline in fee collection rates. The average collection rate for the top 500 property management firms in China dropped to 71% last year, down from 89% in 2021. Industry leaders report that 2025 saw the most significant drop, with the trend worsening since then. This creates a vicious cycle: lower collection rates force management companies to exit more projects, fueling fears of further asset value depreciation among homeowners and developers.

Local authorities may be forced to step in, potentially deploying state-owned enterprises to maintain essential services and quell resident dissatisfaction over issues like uncollected trash, security gaps, and malfunctioning elevators. Sam Radwan, CEO of Enhance International, describes this as a significant and unique problem within China's property crisis, noting that poorly managed apartments could lose up to 25% of their value. He warns this is just one of many concerns in China's property market, alongside oversupply, high vacancy rates, increasing foreclosures, and weakening demand.

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Apartments in residential areas with poor management quality can lose up to 25% of their value.