Boyu leads $300m round for Chinese apartment rental player
Boyu Capital has led a $300 million Series A round of funding in Cjia.com, a serviced apartment brand created by Huazhu Hotels Group and IDG Capital.
Other participating investors include Yunfeng Capital, Ascott China and the offshore arm of China Construction Bank (CCB). The new capital will be used for property development in core cities, as well as for marketing and technology development.
Founded in 2015 and also known as Chengjia Gongyu, Cjia received $50 million in pre-A series funding from Huazhu and IDG in 2017. It now has more than 20,000 apartments across more than 100 properties in first-tier Chinese cities like Beijing and Shanghai.
The core product is cost-effective apartments that rent for RMB2,500-5,000 ($351-702) per month. There is also higher-end accommodation available for up to RMB20,000 per month. Cjia claims the average occupancy rate for its mature projects is 95%.
China’s long-term property rental market 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 be worth RMB4.6 trillion by 2030, up from RMB1.1 trillion in 2018.
The combination of market opportunity and enabling technology has led to the emergence of numerous online platforms that connect landlords with potential tenants. There are two basic business models: decentralized providers that sign up landlords individually; and centralized players where the operator manages the whole building.
Cjia.com is the second kind, with Huazhu using its industry networks to secure locations. The company claims to have developed the first central authentication service (CAS) system in China for short-term and long-term rentals. Short-term tenants currently account for 20% of its business.
Other property rental platforms that have received PE funding include Mofang Apartment and Danke, both of which closed their most recent rounds in March. Caisse de dépôt et placement du Québec (CDPQ) led a $150 million Series D for Mofang while Tiger Global Management and Ant Financial led a $500 million Series C round for Danke.
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