China is trying to kickstart its rental market with subsidized loans for renters and sweet land deals for developers, to meet an festering housing shortage in the country’s growing cities. But rentals remain a tough sell in China, where homeownership is prized and rental yields are low.
In the largest cities, yields are about 1.5 percent, according to data cited by Bloomberg.
In July, the Chinese government identified 12 cities where population has increased and the shortage of affordable housing is acute, including cities like Shenzhen and Guangzhou.
On the developer side, the government is using its power to stimulate the rental market. Shanghai has set aside 31 percent of its land for rental development through 2021, according to research firm GavekalDragonomics, and government-controlled lenders like Industrial & Commercial Bank of China have marked hundreds of billions of yuan for rental development.
And for renters, cities like Nanjing, Shanghai and Shenzhen have begun offering a slew of incentives, including rental subsidies, the option to take out loans to pay rent, and the right to have their children attend local schools, which is usually reserved for homeowners.
Despite the incentives, China’s real estate industry is likely to remain dominated by apartment sales, where payback is a lot faster, Bloomberg reported.
Shanghai-based Harbour Apartments, which plans to hold about 80,000 rental units by 2019, is bringing a new model to the rental market — it’s refurbishing old buildings into co-living suites and charging tenants between $90 and $3,000 a month. It’s also eliminating real estate brokers from the process. [Bloomberg] – Chava Gourarie