(Yicai) Feb. 28 -- Hubei University has become the first educational institution in China approved to acquire unsold property and turn it into student dormitories after the government introduced an affordable housing policy last year.

Hubei province gave the go-ahead to a plan of Hubei University’s Yangluo Campus in Wuhan to buy two buildings with 352 apartments from the Yangluo Water Town project for CNY1.7 billion (USD237 million). The university will spend a further CNY260 million (USD35.7 million) to renovate and furnish the units.

China’s housing ministry said last May that local governments would be allowed to organize local state-owned enterprises to buy unsold residential properties at reasonable prices for affordable housing purposes and to bolster the real estate market.

Wuhan, the capital of Hubei, set up two wholly owned holding companies in July to operate and manage properties that the local government acquired for affordable housing. The city bought its first project with more than 500 apartments the following month as rental properties for low-income groups.

The Yangluo Water Town project received presale approval in 2022, but remains largely unsold. The price the university will pay for the two residential blocks is about 40 percent below the developer’s initial listing price.

This is the first time a university has bought unsold commercial housing, with more acquisitions of this type expected to happen, said Yu Xiaoyu, research director at Yihan Consulting.

There are hardly any delivery risks for these types of deals because the properties involved are either finished or almost ready for handover, Yu noted, adding that market prices are at the bottom and the buyers are backed by local governments.

Diversifying the use of commercial housing acquired by local governments under the affordable housing policy is essential, said Zhang Bo, director of the 58 Anjuke Institute. Besides student accommodation, these properties could also serve as blue-collar housing or homes for the elderly, he noted.

Editor: Futura Costaglione