China property venture You+ helps its young tenants achieve their dreams

With financial backing from Xiaomi's Lei Jun, You+ co-founder Liu Yang is developing a new kind of investment property business -- one that cares more about tenants' dreams than profits

PUBLISHED : Wednesday, 22 April, 2015, 12:16am
UPDATED : Wednesday, 22 April, 2015, 12:16am

Liu Yang, co-founder of You+ International Youth Community, worked as a sales and marketing executive in different cities, including Chongqing, Fuzhou, Shanghai, Beijing and Hong Kong, for more than 10 years before he went to Guangzhou in 2011 to start his own venture.

Based on his experience and the hard life for new migrants in China's big cities, Liu wants to shelter "young souls", particularly those who have a dream. Most importantly, he is trying to build up the feeling of family among tenants so they can help each other in their life and careers.

It has proven popular so far. All his projects have been leased out within one month after opening and there are still long queues in cities such as Beijing and Guangzhou that keep Liu busy in raising money and looking for new projects.

 

Why did you start this business?

During China's urbanisation process, most of the migrants to big cities were young people. I'd been drifting across a few cities for over a decade and asked myself what these young people really wanted.

They often live in underground rooms or very old apartment buildings. Most of the young people working in Zhongguancun (China's Silicon Valley) live about an hour and a half away by metro.

So, first, they need a home: a shelter against storms in life. I want to provide such homes for city drifters so that they'll be cared for when they're sick or unhappy, like in a family.

We not only provide a bedroom, but also a big shared sitting room for these young people to make friends and share resources so that they can develop a better career in big cities.

 

What is the difference between living communities and start-up communities?

Start-up communities provide office space. They also have living facilities, but of smaller size than living communities.

Suzhouqiao start-up community will be our first. It is near the Zhongguancun high-tech zone.

 

What are your criteria for project locations?

Convenient transport, good living facilities in the neighbourhood and [not too close to the] downtown area. If it is in the downtown area, we would like a quiet place, not facing the main street.

Such criteria are set to cut costs as much as to create a tranquil living environment.

When opening a new project, we need to consider whether we've got enough staff and money and if we can find an idle building with an owner sharing our vision.

 

How would you describe your clients?

They are from very different backgrounds, doing all kinds of jobs you can think of, or even some jobs you might not imagine. For example, we have a tenant in Guangzhou who once studied pet psychology in the United Kingdom.

We will keep a proper mix of regular office workers and self-employed. We will also keep a good mix between male and female, singles and couples [without children].

 

When was the turning point in your business?

The first one was in 2013 when I received money from two angel investors and opened the second project. At that time, we mainly considered it fun, but it wasn't a very profitable business.

We can't increase rents too quickly; often the rise is just to keep pace with rental increases from the landlords who lease the property to us.

Last August, Mr Lei Jun [of Xiaomi] invested 100 million yuan (HK$126.6 million).

We still need to raise more funds to support our expansion but haven't started the new round of fundraising yet.

 

Do you think you have passed the twists and turns in your venture?

No, I'm now under even bigger pressure, as I've got money from investors. I must do better and cannot make any mistakes.

We are now a team of over 100, from only a few at the beginning. We also need to recruit more talent. The point is our model is brand new and no one has related experience. We are not in a traditional hotel business or property development, nor a traditional property management company or a social network platform.

 

What is your profit model?

We'd like to ensure a certain level of profitability, but the cycle is extended. It's not a business of hefty profits. You can't aim for high profit just because you offer good products. Consumers often do not like to pay expensive bills. The cheaper the better for them.

We are not a venture that will burn a lot of money. We generate stable recurring cash flow. But different from developers who operate investment properties, we can't increase rents as they do if projects are managed well.

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