HomeEntrepreneurMeet The Korean Condominium Rental Startup Disrupting A Pink-Scorching Housing Market

Meet The Korean Condominium Rental Startup Disrupting A Pink-Scorching Housing Market

As a founding member of WeWork Labs, the shared workplace house large’s enterprise arm, Matthew Shampine helped remodel the world of economic actual property. Now he’s taking up South Korea’s deposit-heavy residential actual property market, one rental at a time.

Living in cramped, unaffordable residences stays an unglamorous actuality for a lot of adults. When Matthew Shampine, the Korean-American cofounder and CEO of condominium rental startup Dongnae, moved to Seoul along with his spouse and new child daughter, he noticed a chance to reshape that actuality in South Korea.

“I actually, actually needed to do one thing that might have essentially the most affect on essentially the most variety of individuals,” says Shampine, 39, in a video interview. “You may ask anybody right here, however Koreans have a robust affinity in direction of residential actual property … we are able to change your complete expertise, right through, and cater to their wants.”

Born in South Korea, Shampine was adopted in the USA, and grew up in New Jersey. In 2007, he returned to Korea for a Korean-American adoptee convention and reconnected along with his organic household. There, he made it a mission to return for good—and do good for the nation.

Shampine joined WeWork in 2011 and cofounded WeWork Labs, the office-sharing firm’s startup incubator. In 2018, he turned common supervisor of WeWork Korea, the place he met Dongnae cofounder Insong Kim, who serves as the corporate’s chief technique officer.

Collectively, the pair launched Seoul-based Dongnae in 2020, with the purpose to make shifting into an condominium extra reasonably priced and accessible. Its key product, Dongnae FLEX, affords short-term, fully-furnished rental properties with low deposits, interesting to recent graduates or vacationers unable to cough up the exorbitant deposits—as a lot as 350 months of lease, the startup says—which can be usually required of Korea’s residences.

“The best way our product has come about is we actually allow individuals to stay the residences that they need to,” Shampine says. “We unlock all these new choices since you’re not restricted by the sum of money you’ve got put aside for a deposit.”

Up to now, Dongnae has opened its doorways to each native and worldwide buyers. Its $21 million sequence A funding spherical in March included NFX, which has backed the likes of Lyft and Doordash, and proptech-focused MetaProp, a backer of Airbnb, together with Korea’s oldest funding fund Daol Funding and Hana Monetary. The recent capital introduced the startup’s whole funding to roughly $34 million, following its $4.1 million seed spherical in December 2020 and $700,000 pre-seed around the 12 months prior. Dongnae declined to reveal its present valuation.

“Residential actual property is the most important asset class right here in Korea,” mentioned Kyung Kuk-hyun, managing director at Daol Funding, in a press release about Dongnae’s newest funding. “Dongnae’s unimaginable progress paired with their robust monetary partnerships with main monetary establishments make this funding compelling.”

Over 80% of Korean family wealth is in actual property, in comparison with roughly 35% in the USA, however homeownership has confirmed more and more troublesome. The typical value of an condominium in Seoul, the nation’s capital and most populated metropolis, doubled between 2017 and 2021 to over $1 million. Housing shaped a centerpiece of Korea’s newest presidential debates, with newly elected President Yoon Suk-yeol pledging to chill down the market and assemble 2.5 million new properties nationwide over his five-year time period.

Renting just isn’t all the time a better different. Korea’s rental housing market largely depends on jeonse, a novel cost system requiring tenants to offer giant upfront deposits. Generally known as “key cash,” these lump sums are as much as 80% of a unit’s sale value—the common jeonse value for residences in Seoul was roughly $516,000 in August, whereas sure districts might attain as much as $572,400, in line with figures from KB Kookmin Financial institution.

The widespread follow of taking out loans to unlock “key cash” provides to Korea’s deepening family debt disaster, which topped 104% of Korea’s GDP in June. Among the many nation’s prime 5 lenders, jeonse debt reached $106.4 billion final June, up from $37.8 billion that month in 2017. Over half of the excellent loans stemmed from adults of their 20s and 30s, who owed $63 billion.

Extra Koreans are shifting out of the high-deposit rental system. Of the full 258,313 lease transactions for residences and homes in April, 50.4% of them had been for month-to-month leases, not jeonse, in line with Korea’s Ministry of Land, Infrastructure and Transport—the primary month since 2011 that jeonse didn’t lead transactions.

Shampine hyperlinks the transfer away from jeonse to the evolving wants of younger professionals, who’re rethinking conventional beliefs of marriage, child-rearing and homeownership. Along with the “liberating” sensation of residing with out debt, short-term property leases present these adults the chance to discover extra unbiased and versatile residing preparations, whereas prioritizing their careers or friendships – an condominium’s college district is much less essential than its proximity to work or location in a “cool neighborhood,” he says.

“For individuals of their late 20s and early 30s, the concept of being unbiased out of your mother and father is totally different than being unbiased by way of not having a roommate,” says Shampine. “You may each work collectively and actually have an incredible condominium. Up to now, right here in Korea, your choices had been both residing in a extremely small co-living house, or an officetel (a constructing with workplaces and residential models) with no facilities in any respect.”

Dongnae started as a list platform for potential renters to e-book visits with property companies, nevertheless it met restricted success. Shampine says his group didn’t foresee “cultural dynamics” that curbed demand for his or her product. “We realized right here in Korea, it’s very simple to go to any condominium advanced across the metropolis, or have a sort of connection to a brokerage, to only ask for a tour everytime you need,” he mentioned. “So the idea of going by means of an app and to e-book [a tour] for like, the upcoming weekend, simply did not actually appear that engaging.”

The preliminary lack of success prompted “good and wholesome,” albeit painful, reflections on the enterprise mannequin, Shampine says. Conversations with prospects, brokers and group members on the bottom knowledgeable Dongnae’s purpose of “turning into the provision, as a substitute of attempting to find the provision.” In July final 12 months, Dongnae pivoted from condominium listings to serviced residences. On the shut of its newest funding, the startup mentioned its properties spanned 60 condominium complexes—now, they span 80, throughout 12 districts in Seoul.

Wanting ahead, Dongnae plans to broaden its house companies supplied to residents, tapping into Korea’s thriving marketplace for furnishings and way of life items. Different startups growing options for residing areas have discovered appreciable success. In Might, inside design platform oHouse raised $182 million to change into the newest Korean unicorn, at a valuation of roughly $1.6 billion.

Shampine hopes to usher in a broader cultural shift. “After I personally replicate on how WeWork modified business actual property right here, from renting house and co-working to precise environments contained in the workplaces, I actually hope that we’re capable of do one thing comparable from a residential perspective,” Shampine says. “Making it a greater expertise … for the brokers, for the landlords, and particularly for the tenants.”



Please enter your comment!
Please enter your name here

Most Popular

Recent Comments