Yujian Apartment failure sparks alarm bells for Chinese rental sector
- Start-up backed by Xiaomi tech guru Lei Jun shuts shop leaving thousands of landlords and tenants in the lurch
The bankruptcy of a major Chinese rented-flat operator backed by Xiaomi founder Lei Jun has highlighted the inherent risk of the previously high-flying sector’s heavy reliance on debt-fuelled growth, according to analysts.
Hundreds of landlords have reported over the past week that they have not been paid October rents from Shanghai-based Yujian Apartment while many of the firm’s tenants say have been asked to leave their flats if they owe rent.
A local bank is also believed to have warned the business to meet its commercial obligations.
Founded in 2014, Yujian claims to manage around 20,000 flats nationwide through various brands.
Tech guru Lei has made two separate investments in the operation, in 2014 and 2015, through his Shunwei Capital and Ce Yuan Ventures.
If a firm of its size has liquidity problems, you can guess what’s the condition of other smaller start-ups
“I was surprised when I heard the news because unlike many small operators, Yujian is relatively established in the sector,” said Chen Lei, an analyst with zhuge.com, a property listing firm.