[INTERVIEW] Rsquare's data will not only find you an office, but decorate it too
Its service relies on more than 150,000 commercial property data entries that it has collected in Korea, including from Jeju Island, and through data analysis not only on the properties themselves but also on the neighborhoods they are located in as well as other factors, Rsquare finds the perfect spot for its clients.
Rsquare started its business in 2014 brokering office spaces, but now it handles logistics centers, retail stores, hotels and more.
Its business scope has also expanded from brokerage services to consulting for sales and purchases, interiors and furnishing.
The company turned to profit in 2017 with sales reaching 16.5 billion won ($13.8 million). Within less than five years, sales have increased by nearly eightfold. Last year, its sales reached 120 billion won despite depressed market conditions due to Covid-19.
“The utmost important asset of Rsquare is the amount and the quality of data on commercial property,” said Lee Johnwoo, CEO of Rsquare in a recent interview with the Korea JoongAng Daily.
“Before, information about commercial properties was scattered all around and was unorganized. There was serious asymmetry in information. Rsquare’s service ultimately aims to provide solutions to that with transparent and digitized data.”
Lee, a Sogang University graduate, started his career at U.S.-based consulting firm Booz Allen Hamilton in 2006 and worked there for six years.
He joined Real Estate Direct, a company behind Rsquare, in 2009 and pivoted it in 2012 after taking it over.
Lee launched the Rsquare service in 2014.
So far, Rsquare has attracted 114 billion won from a number of investors including SoftBank Ventures Asia and Z Venture Capital.
Below is an edited excerpt of the interview.
Even though Rsquare is a proptech company, the initial stage of the preparation process seems very analogue. Can you explain more about it?
When we first jumped into the market, there wasn’t organized information about commercial properties. Collecting data and putting it on the platform was the first thing we did. We formed a group of 10 or so during the weekend to take tours of a certain area. We took a KTX to a suburban area and did a lot of leg work to check each building and its vacancies and what kind of facilities were around it. At the time, even maps provided different information. We put together 10 maps and checked if there were any buildings we had missed. Now, our database covers every nook and cranny of the country including Jeju Island. The data collecting process has become somewhat easier now since updating and fixing information on existing buildings recorded on the database is much simpler.
What brought to you into the commercial real estate brokerage industry?
It all started from a simple thought that I should start a business since people’s lives have grown longer and the concept of a lifetime job has become obsolete. I stepped into this market because real estate is something that will not disappear even after a long time. In particular, the commercial property market, which mostly focuses on the B2B format, doesn’t have that much volatility compared to the B2C market. There is no one-hit-wonder type of trend, rather it is constant.
What is the most important technology Rsquare uses?
There are two types that we consider the most important. The first is to collect data and transfer it to online. Real estate has long been focused on the offline market. There is qualitative information that was exclusive to the offline market such as the topographical information that such location is ill-fated or good-fated, or what kind of personality the building owner has, the property’s context and its history and all that stuff. Putting all this sporadic information onto the database is one thing. The second thing is factoring out meaningful information and value from that database. Through machine learning, we sort out information that could be useful to the clients in making their decisions. We are also trying to upgrade the visuals of our data such as the quality of the maps and the available office spaces.
Have you seen any trends in clients’ search for office spaces?
For IT-related companies, they definitely want to have their offices in the Gangnam area and I think it is because of the infrastructure and supply of human resources. Even traditional retail companies, which used to prefer areas nearby Myeong-dong, as seen in Lotte Department Store and Shinsegae Department Store, now want to find a new office in Gangnam if there is an ‘e-commerce’ factor added to it. Car companies or startups that specialize in self-driving technology also prefer the Gangnam area. For fashion and trend-related companies, they prefer neighborhoods like Seongsu-dong in eastern Seoul.
Rsquare started with office space rental brokerage service but has now formed a comprehensive platform where it takes charge of the spaces’ interior, furnishing and even mediating sales and purchases of the building. How was that possible?
Business ideas started from the demands of the clients. They were satisfied with the initial service and then inquired whether we knew or could connect to interior companies or furnishing companies that they can trust. We concluded it would be more efficient for us to start the business and it all started organically. We were able to benefit from the client base we collected from the brokerage service because for the interior business, for example, it is hard to find which company is in need of a new interior. There is demand but it’s hard to find them. We have that database so it’s easier for us to find the customers. For interior, we have our in-house team. More than 50 percent of the interior customers end up coming back to us.
Do you have plans for a separate business model for the data exclusively?
We do. We plan on offering data analytics business to the clients, although it should take some time. We acknowledged that an objective set of data is needed when making decisions for commercial buildings, such as sales or purchases, because often, a lot of stakeholders are involved. At the moment, there is no such organized set of data that analyzes the information they need at once. It is scattered around. We plan on offering analyzed data that is valuable enough to aid their decision making process. It is like an advanced version of real estate consulting.
Rsquare established its Vietnam office last year and Singapore office this year. Why did you decide to advance into Southeast Asian countries?
The Southeast Asian region was attractive because first the market was big but there was no transparent system for commercial property transactions whereas most Western countries have already set up systems and there is a lot of competition. Southeast Asian countries still lack infrastructure and we wanted to resolve that. Also, there were already a lot of Korean companies doing business in Vietnam so it was easier for us to secure the initial clients. We want to focus on five Southeast Asian countries first and maybe advance into Australia in later.
Rsquare raised $72 million last year in its Series C funding from Stic Investments. How do you plan on using the new fund?
We are planning on putting a lot of the new fund into hiring qualified developers. There are about 60 developers at the company and we plan to expand that to 120 this year. We already hired 100 new employees this year. It is our priority. They will be at the forefront of upgrading our services and finding solutions that can make our data profitable.
How do you evaluate Korea’s proptech market?
I think it has competitiveness and is developing at a fast pace. No other countries have enthusiasm about the real estate market like Korea. If there is interest, new business models are destined to be formed. And also, Korea already has enough internet technology to realize such businesses. If one should think that Korea’s proptech market is still slow-paced, I think it is because there is less demand for certain types of technology that is only needed in big countries like the United States. If it takes hours to go from one property to another, virtual reality-based visuals of the property would come in handy. But in Korea, everything is so near that such service is not needed as much.
BY JIN EUN-SOO [email@example.com]