[비즈한국] The real estate brokerage platform Zigbang is expanding its "direct brokerage" business through its sub-subsidiary, Nemoin Real Estate Brokerage. Last May, the company listed about 2,500 commercial property listings on its subsidiary platform, Nemo; this number has since grown to approximately 12,600 listings. During the same period, the proportion of Nemo listings occupied by Nemoin's own listings rose from 25% to 52%. Recently, Nemoin posted job openings for licensed real estate agents to handle the increase in listings. While the real estate brokerage industry is concerned about major brokerage platforms entering the direct brokerage business, Zigbang maintains the position that it is simply "independent subsidiary management."
Nemo is the largest commercial real estate platform in South Korea. It displays office and commercial listings requested by building owners or real estate agents on its app and website. Sugarhill, the operator of Nemo, launched the service in 2017. In March 2019, it established Nemoin Real Estate Brokerage to enter the direct brokerage market. According to Sugarhill, Nemo has recorded approximately 2.7 million app downloads, 550,000 cumulative registered listings, and 1.8 million monthly listing views to date. Zigbang acquired all shares of Sugarhill in June 2019, making Nemo (Sugarhill) a subsidiary and Nemoin a sub-subsidiary of Zigbang.
According to industry sources, Sugarhill and Nemoin recently posted job openings for licensed real estate agents. By May 18, Sugarhill was seeking dozens of brokerage staff, as well as licensed agents and assistants, while Nemoin is looking for dozens of commercial/office specialist agents by June 4. A Sugarhill official explained, "As it has been over two years since Nemoin was established, the number of brokerage items and clients has increased, but there are only 11 full-time licensed agents. Even if agents are hired by Sugarhill, they undergo basic training and a probation period before carrying out brokerage activities as part of Nemoin."
The number of commercial listings secured by Nemoin has increased fivefold in one year. The share of Nemo's commercial listings accounted for by Nemoin grew from one-quarter to half during the same period. BizHankook analyzed the commercial listings on Nemo on the 19th and found that out of 24,000 total listings, 12,600 (52.8%) were posted by Nemoin. According to a Korea Economic Daily report last May, about 2,500 out of 9,700 listings (25.8% of the total) were Nemoin listings at the time.
This is supported by full-scale backing from the parent company, Sugarhill. Nemoin is currently accepting listings through the Nemo website. When a building owner lists a commercial property there, the ad is simultaneously exposed on Zigbang and Daum Real Estate. They are also running a promotion offering up to a 40% discount on brokerage fees if the owner entrusts the brokerage to Nemoin on the condition that they do not list the property with other brokers. While Nemo currently advertises that registering listings is free, it is unknown whether Nemoin pays advertising fees to Nemo (Sugarhill). A Sugarhill representative stated, "The contractual relationship between Nemoin and Sugarhill is confidential, so it is difficult to answer."
Regular real estate agents (corporations) pay advertising fees in exchange for exposing their listings on Nemo. The cost to display 10 listings for one month ranges from a minimum of 77,000 won to 198,000 won (in Seoul's Gangnam, Seocho, and Songpa districts) depending on the region. Using "premium products" that appear at the top of search results for administrative districts or subway stations costs three times the regular ad fee (605,000 won based on commercial properties in Yeoksam-dong, Gangnam-gu, Seoul). Building owners who want to post direct listings without going through an agent pay 220,000 won for 90 days.
General real estate agents competing with Nemoin are expressing their frustrations. One netizen, who identified themselves as a licensed agent, wrote on a community for a major education company: "The commercial real estate platform 'Nemo' has created its own 'Nemoin Brokerage' to exclusively monopolize the consumer demand on the platform." They criticized the move, saying, "The company grew through the active participation of brokers and the monthly advertising fees they pay. Even while it is still run on that money, it feels like they are stabbing brokers in the back and trying to take away not just the rice bowl, but the entire rice cooker."
The real estate brokerage industry is concerned about major platforms entering the direct brokerage business. Zigbang recently posted job openings for real estate agents as "new business model (BM) support/sales managers," but deleted the listing following criticism that it was expanding "direct brokerage" into the parent company's business domain.
An official from the Korea Association of Realtors stated, "We believe it is morally problematic for a major real estate platform company like Zigbang to enter the brokerage market. Most licensed agents are small-to-medium business owners in what is called the 'alleyway commercial district.' It is hard to view the move by a platform that grew based on them to introduce a competitor favorably. If a brokerage firm backed by strong capital is born, it could lead to a situation where small, local brokers are absorbed into conglomerate-owned companies or lose their market share. Because the revenue generated from these platforms is significant, it is currently difficult to organize boycotts or other forms of backlash."
A Zigbang representative explained, "Nemoin is a Nemo subsidiary that existed before Zigbang acquired Nemo, and it has no direct relationship with Zigbang. Zigbang does not intervene in the management of its subsidiaries, and the subsidiaries are managed independently with their own CEOs," adding, "There is currently no plan for (Zigbang) to enter the direct brokerage sector."
Meanwhile, Zigbang returned to profitability last year. According to its audit report, Zigbang achieved 45.8 billion won in service revenue, 3.8 billion won in operating profit, and 7.4 billion won in net profit in 2020. Revenue increased by 10% compared to the previous year, and the company reversed its operating and net losses into profits. In 2019, Zigbang recorded an operating loss of 4.2 billion won and a net loss of 2.4 billion won due to rising employment and marketing costs—its first deficit in four years since 2015. Last year, the company provided a short-term loan of 4.8 billion won to its subsidiary Sugarhill. The total amount lent to Sugarhill as of the end of last year stands at 6.3 billion won.