Chinese apartment rental service Danke raises $500m
Chinese start-up Danke Apartment, operator of an online platform that connects landlords with long-term rental tenants, has raised $500 million in a Series C round led by Tiger Global Management and Ant Financial.
Other participants include Primavera Capital Group and existing investors Gaorong Capital, CMC Capital Partners, and Joy Capital, which backed the company’s $70 million Series B-plus and $100 million Series B round last year. This round is said to value Danke at $2 billion.
Founded in 2015, Danke provides high-end rental services in 10 cities, including Beijing, Shanghai, Guangzhou, and Shenzhen. The company seeks to offer a more transparent and efficient service by replacing agents as the buffer between landlords and tenants. If the traditional rental market is C2C, Danke follows a C2B2C model, according to Derek Shen, the company’s executive chairman.
The new funding will be used to develop services for blue-collar workers, upgrade the company's big data system and enhance its supply chain management.
“The long-term apartment rental industry has now entered into a more sophisticated period. Under China’s national push to encourage both home rental and purchasing, we will aim to improve our operational efficiency and bring more convenience and better resources for both the landlords and tenants,” said Shen in a statement.
The industry received a boost in 2017 when the government shifted policy to encourage rental rather than home purchasing, with a view to curbing prices. Real estate broker Lianjia projects the market will rise from last year's level of RMB1.1 trillion ($172 billion) to RMB2.9 trillion in 2025 and RMB4.6 trillion in 2030. By 2030, the leasing population will be 270 million, with young people responsible for most of the additional demand.
There are two basic business models: decentralized 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 to the former category – which includes Danke – although individual strategies vary. Some companies formally lease apartments from individual owners and then releasing them to tenants after making renovations, while others function more like marketplaces.
Major players include Uoko.com, Baletu.com and Ziroom, a spin-out from Lianjia.
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