ZHANG YAN learned first-hand how the coronavirus is ravaging China’s once booming real estate economy.

The Shanghai landlord on Internet home-listings platform Danke was surprised when she recently got a terse notice from the company declaring it would withhold all rental payments for a month because of the epidemic.

Customers who have demanded payments owed were rebuffed because of an overload in requests.

“Danke has caused me big trouble,” Zhang said of the company, which connects landlords with renters and allows them to lease apartments online. “The platform should protect apartment owners’ interests. I also have a family to feed.”

China’s online real estate startups, which once promised to bring the country’s booming property sector into the 21st century, have been side-swiped by the virus outbreak.

Danke — a unit of U.S.-listed Phoenix Tree Holdings Ltd., which is valued at US$2.2 billion — offers a rare glimpse into how a sector that’s attracted billions from Tencent Holdings Ltd. and other investors is on thin ice because of the market collapse and tighter government scrutiny in the wake of the outbreak.

Apartment owners across the country have set up WeChat groups to discuss countermeasures. On one forum, with as many as 200 landlords claiming to lease houses on Danke, heated discussions have lasted late into the night.

In Shanghai, property owners rushed to Danke’s offices, demanding the company hand over rents as usual. Some have threatened to cancel their contracts with the firm.

Danke acknowledged Feb. 13 that it’s been “severely hit” by the spread of the coronavirus. A number of new virus-prevention measures imposed by local governments have inflated fixed costs as demand for its services collapses.

“At this critical moment, all stakeholders in the housing rental market need to make reasonable sacrifices so that we can overcome the difficulty together,” the statement from Danke said.

On Monday, it apologized in a statement for “communication issues” and asked for support from its hundreds of thousands of landlords. It didn’t respond to a request for comment on Zhang’s case.

In Wuhan, where the outbreak took off, Danke said it would stop paying rent for 90 days to apartment owners.

The emerging rental management sector still only accounts for a small slice of China’s property industry but was expected to rapidly expand by the end of this decade. Growing strains in the sector could harm China’s plans to create a modern rental market that’s necessary to ease burgeoning housing demand.

The country has 190 million workers who rent, according to research from real estate agency Lianjia. That’s more than three quarters of all people living away from their homes. A robust supply of rental properties can also help delay home-buying and tame runaway real estate prices.

Other long-term rental startups such as Ziroom and You+, which operates one of China’s largest co-living communes, also face a double whammy.

Newly introduced measures in cities like Shenzhen and Hangzhou compel landlords to alert authorities about tenants from Hubei Province, or face punishment. In addition to dealing with increasingly angry landlords, they also must handle tenants demanding rental waivers because lockdowns have prevented them from returning to their rented apartments.

Last week, Airbnb Inc. extended a freeze on all Beijing business by two months, following strict local regulations aimed at curbing the virus. (SD-Agencies)