Chinese long-term property rental players get PE funding

Uoko raised nearly RMB1 billion ($157 million) in equity and debt financing in what is described as the first tranche of a Series C round. Shenzhen Capital Group, Legend Capital, Matrix Partners China and SIG China contributed equity alongside strategic players Greentown Real Estate Services Group and Galaxy Holding. The debt was provided by several domestic banks as well as financing entities linked to household appliances brand Haier.

Founded in 2012, Uoko covers Chengdu, Wuhan, Beijing, and Hangzhou, connecting landlords directly with prospective tenants. The company's platform is not only used to find accommodation, make reservations and set up payment schedules but also to access a range of value-added services, from decorating and cleaning to appliance sourcing and online communities of tenants.

Uoko previously received angel funding from Ferry Venture Capital, followed by a Series A round from Legend, Matrix and SIG China, and a Series B round from Legend and other investors. Xiang Liu, Uoko's founder and CEO, told local media that the latest funding would go towards strengthening IT and operations as well as scaling the business. It currently has more than 40,000 listings and has served over 10,000 landlords and 80,000 tenants. Turnover was nearly RMB1 billion in 2017.

Baletu.com, which offers similar services, has received RMB300 million in funding led by Tiantu Capital, with participation from existing investor DCM Ventures. It manages three million properties across 10 cities on behalf of over 10,000 professional landlords. Haiyan Zhang, a partner at Tiantu, said in a statement that growth was being driven by the popularity of long-term rentals and rising demand for better quality services.

Both companies target younger tenants – Uoko specifically identifies them as recent university graduates who share accommodation and pay RMB1,000-1,500 per room. These people are expected to account for the bulk of demand as turnover in China's property rental market rises from the current level of RMB1.1 trillion to RMB2.9 trillion in 2025 and RMB4.6 trillion in 2030, according to real estate broker Lianjia. By 2030, the leasing population will be 270 million.

The market received a boost last year when the government shifted policy to encourage rental rather than home purchasing, with a view to curbing prices. There are two basic business models: de-centralized providers that sign up landlords individually, which is costly but allows for rapid scaling; and centralized players where the operator owns the whole building.

PE investors have gravitated towards the former category, although individual strategies vary, with some companies formally leasing apartments from individual owners and then releasing them to tenants after making renovations, while others function more like marketplaces. In January, Warburg Pincus, Sequoia Capital China, and Tencent Holdings led a RMB4 billion round for Ziroom, a spin-out from Lianjia. More recently, Danke Gongyu and Qingke each raised around $100 million.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Expansion
• Real estate
• Support services
• Technology
• China
• Growth capital
• Shenzhen Capital Group
• Legend Capital
• Matrix Partners
• Susquehanna Asia Investment
• Tiantu Capital
• DCM-Doll Capital Management