While the coronavirus spreads around the world creating a new wave of panic and uncertainty, the Japanese giant SoftBank
SoftBank Group Corp. has made two large bets on the Chinese property market, according to people familiar with the investments, exposing it to a volatile sector during a dramatic economic slowdown. Recently, Beijing-based online housing platform Beike has secured $2.4 billion in a Series D Plus from a consortium led by SoftBank's Vision Fund which is reportedly doubling down on investments in the Chinese real estate market.
The Beijing-based Beike is regarded as a new version of Ziroom. It leases apartments from individual owners, renovates them and subleases them to renters. In a deal that values the company at $6.6 billion, the SoftBank Vision Fund injected $500 million directly into Ziroom and bought an additional $500 million of shares from its founders. It was one of the fund's last deals: Having spent around $80 billion in two years, it is keeping the rest of its capital in part for follow-on investments in its portfolio companies.
The deals, which closed in November, could pose challenges, given the deepening hit to the Chinese economy from the coronavirus outbreak. A series of high-profile missteps by SoftBank's $100 billion Vision Fund, including an investment in the parent company of WeWork that produced a multi-billion-dollar loss, has hamstrung efforts to raise funds for a second enormous investment vehicle.
Still, the twin billion-dollar investments, one in apartment-rental firm Ziroom and the other in online real-estate portal Beike, give the Japanese conglomerate a foothold in a market where prices have soared in recent years.
China's real-estate market has surged in recent years, especially in big cities, as rising middle-class incomes have spurred home buying. Residential-property sales rose 10% last year, to 13.94 trillion yuan ($1.99 trillion), according to China's National Bureau of Statistics.
