(Yicai Global) Sept. 9 -- The eastern Chinese city of Jinan intends to buy 3,000 rental homes through an investment platform in an unusual move aimed at perking up the local real estate market, according to a source.

Many property developers are rushing to sign up to the government’s tender, an insider at Jinan City Development Group, the local government-backed investment platform, told Yicai Global. 

Jinan City Development will buy homes to rent to people coming from outside the capital of Shandong province, it said on its WeChat account recently. The platform did not disclose a budget, but if each apartment cost CNY1 million (USD144,000) -- a conservative but reasonable estimate -- it would cost the government about CNY3 billion (USD432 million) in total.

The move is surprising. It is rare for local governments in China to acquire completed properties to lease out because public housing projects are built for that purpose, another insider said. Land auctions sometimes specify that a certain amount needs to be saved for rental purposes.

Jinan’s plan should help reduce housing stock in the local market and, if the conditions on location and quality are somewhat loosened, it will also help the authorities fulfil their task of monitoring and helping local project developers secure enough funding to complete and deliver those projects, the same source added.

Such bulk buying of properties can help developers destock and get rental homes to market quickly, according to Xu Yuejin, an associate research director at the China Index Academy.

Jinan City Development said it would prefer the properties to be located close to the downtown area with fully fledge infrastructure for transport, life and medical services, according to the tender. Ideally the investment platform would like to buy one or more complete apartment buildings where no unit has yet been sold, it said.

Some 35,300 housing units were sold in Jinan in the first half of this year for an average price of CNY13,706 (USD1,974) per square meter, a report by the Jinan Real Estate Association showed. , Under plans released earlier, the city aims to build 205,000 subsidized apartments for renting out in the five years ending 2025.

Editors: Tang Shihua, Emmi Laine, Xiao Yi