Instead of interventionism and a new web search engine, the duo behind this Croatian startup wants to solve the problem of housing shortages on fintech principles.
As Poslovni Dnevnik/Bernard Ivezic writes on the 10th of September, 2019, Worig is the first Croatian startup for long-term rental apartments. While answers to this burning problem all over Croatia is most often sought in state and city interventionism or in the creation of more advanced web search engines, this Split duo, brothers Nino and Deni Ćosić, approached the problem in a different way and created an impressive fintech startup.
Nino Ćosić, CEO of Worig, says that the key to the problem on this market, as well as unusual and exorbitant conditions for renters, is a chronic lack of information about both renters and those who seek rental agreements.
“Worig wants to introduce a credit rating system for renters in Croatia and beyond, across the EU, which would give reliable tenants the opportunity to rent an apartment on more favourable terms, while reliable renters could get better tenants, thereby providing security and protection,” explained Ćosić. This innovative Croatian-made system, which combines banking, lending and insurance, is not entirely new. It exists in various forms in Switzerland and Germany, but Ćosić points out the fact that it has not been digitised there.
“There are places where, because of the lack of such a service, especially in tourist destinations, renters think that it’s always better to go for short-term rentals. However, this really isn’t the case, and Worig would help them see this in terms of market principles. For people who decide instead to buy an apartment, it could help them discover how much of a cost-effective option that is,” Ćosić says.
Although there are still similar startups that exist across the EU, a number of potential investors have shown considerable interest in this Croatian startup over the last six months. At the beginning of the year, the new Croatian startup entered the shortlist of the best at one of Europe’s largest startup festivals, TNW in Amsterdam. Then, EIT Digital invested a very welcome 15,000 euros in it.
Worig then entered the largest Slovenian startup accelerator, ABC, which is the only regional partner of EIT Digital. Finally, in the last two weeks, Worig won the Croatian finals of RBA’s Elevator Challenge – winning 5,000 euros, then the largest Croatian VC fund, Fil Rouge, gave them an initial investment of 50,000 euros.
Worig’s market is quite large. According to Eurostat, 102.7 million EU citizens live in market-rented apartments, an additional 51.3 million live in free-of-charge apartments, while the remaining 359 million live in their own apartments.
The situation is different in Croatia. The percentage of tenants is half of that of the European Union and is around 10 percent (approximately 400,000 citizens). In addition, around 90 percent of tenants in Croatia, according to Eurostat, have either preferential or free leases. And while in some countries, such as Germany, the market is so regulated that interviewees from the development industry have no doubts about the figures there, the Croatian market is said to be extremely grey and so unregulated that they consider Eurostat’s statistics for Croatia to be entirely incorrect.
Among other things, they claim that the number of people who rent apartments in Croatia is much higher, and Ćosić believes the same.
“My estimate is that in our country, 12 percent of citizens rent apartments, similar to the situation in Slovenia, but in our country, this ia a market that is completely unregulated and very grey,” Ćosić stated.
Eurostat’s data, furthermore, doesn’t do well to indicate that the number of rental apartments varies by country and by year, and this also leads to distrust in such statistics. In the United States, the Pew Research Centre states that the number of apartments offered for rent from 1965 to 2016 has doubled to 43.3 percent, and jumped by about ten percentage points in the last ten years. Namely, Americans are renting apartments more than ever before. On the other hand, the supply of rental apartments has stabilised in the last decade, to 75 million units.
Ćosić says that similar trends are followed in the European Union, and especially here in Croatia.
“This tourist season in Croatia has shown that there will be no room for all apartment owners on the day-to-day rental market, and Airbnb has already seen a 30 percent increase in long-term rental apartments,” Ćosić says. He added that he does not expect that, on September the 15th, when PSD2 regulations are put into service and their service starts, that their startup will become an instant hit in Croatia.
Initially, he sees opportunities in Austria, Switzerland and Germany. “In Switzerland, you have these credit ratings, but they’re not digitised, nor are all of them applicable to rentals, rather just to buying an apartment,” Ćosić said.