State-owned landlords in southwest China put first batch of rental housing into market
The first batch of rental homes operated by state-owned companies in southwest China's Chengdu was put into the market recently with the starting monthly rent set at 470 yuan,, a Chinese news portal, reported on Tuesday, citing local housing authorities.

Chengdu, the capital city of southwestern China's Sichuan province, is one of the 12 cities identified by the central government in July as having net population inflows for years and are given incentives to develop the rental market for stabilizing home prices while relieving the strain on accommodation.

It's reported that all of the 2,200 apartments for lease are hardbound and in locations boasting good traffic and infrastructure. According to the Chengdu Housing Management Bureau, individuals or institutions are invited to bid for the rental homes with starting prices ranging between 470 yuan to 1,850 yuan. Lodging houses included in the program cover floor areas of 75, 106 and 144 square meters with starting rents at 600, 850 and 1,100 yuan.

Currently, the Chengdu municipal government has set up four state-owned companies to specialize in the home rental business in bid to put stockpile of unsold houses owned by local government into more efficient use.

The Chinese government is widely reported to have proactively encouraged its citizens who could not afford to buy flats to turn to the rental market. In July, nine national ministries including the Ministry of Land and Resources, the Ministry of Housing and Urban-Rural Development and National Development and Reform Commission jointly announced to take multiple measures to cultivate home-leasing markets in big and medium-sized cities with net population inflows.

The specified state-owned companies in related sectors in the cities would be re-modeled into apartment rental companies and called on to play active and leading roles in bid to increase rental housing supply and address the endemic problem of accommodation.

The 12 pilot cities include south China's Guangzhou and Shenzhen, east China's Nanjing, central China's Zhengzhou and Wuhan, and northeast China's Shenyang. Shanghai and Beijing were also included later. With a spate of incentive policies, the government aims to turn the cities into good destination for tenants.

It's reported by local Chinese media some cities would resort to a broad range of incentives to facilitate rental deals. For example, in Nanjing, rental subsidies are provided; in Guangzhou and Shanghai, tenants are endowed rights to have their children enrolled into local schools that were previously only accessible to homeowners or households with local hukou—registered permanent residence.

In Shenzhen, south China's technological center where headquarters of Internet giant Tencent is situated, tenants could withdraw 65 percent of their monthly pension contributions or get a loan from China Construction Bank for paying monthly rent.

For a long period, the populous first-tier cities have seen high demand for rental housing. Although the supply continues to rise, it tends to fall short of demand. “Developing the rental market would become one of the long-term regulatory policies for the country's housing market while the efforts could not only help boost interests and rights of tenants but divert more supply into the market,” said Zhang Dawei, the chief analyst of Centaline Property.

“Multiple policies have been adopted for speeding up the supply of land for building rental housing. Property developers are welcome to partake in projects like remodeling obsolete industrial premises into lease apartments.” However, Zhang noted, comparatively low returns rate still make common homeowners turn away.

Some industry insiders argue if newly founded state-owned companies would merely specialize in the rental business, their meagre revenue could hardly keep the operation on the go. “It would be difficult for businesses to earn a profit given that the rents are comparatively low, said Chen Baocun, the director of China Urban Industrial Development Union, a think-tank, in an earlier interview. He agreed there is a big chance for the companies to fall short of covering their expenses after taking over the rental flats from local governments. 


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