Intensive Issuance of New Local Regulations Usher China's Real Estate Market into Rental Housing Era
Dou Shicong
/SOURCE : Yicai
Intensive Issuance of New Local Regulations Usher China's Real Estate Market into Rental Housing Era

(Yicai Global) Aug. 31 -- China's real estate market is marching into the rental housing era as more than 30 cities have introduced relevant regulations on tenancy. Developing the residential rental market has become a concern in many cities in China.

One month after 12 cities, such as Guangzhou, Shenzhen and Nanjing, carried out rental housing projects as pilots, an announcement was jointly released by the Ministry of Land and Resources (MLR) and the Ministry of Housing and Urban-Rural Development (MOHURD). The announcement shows that several cities including Beijing and Shanghai will be the pilot to initiate construction of rental housing on collectively-owned land.

Statistics of MOHURD indicate that about 160 million people are already renting houses in urban areas, accounting for 21 percent of urban permanent residents, of which newly-employed graduates and migrant workers were the main drivers. However, the rental housing markets in big cities are faced with problems like housing shortages and high rents.

The housing price is 38.5 times that of rent in China's main cities. Statistics from securities traders show that the disparity between the price of buying and renting housing is more than 50 times in Shanghai, Beijing and Shenzhen, when the reasonable rate should only be between 16.7 to 25 times higher. Given the tension and of the risk of bubbles in the real estate market, the contrast between supply and demand can be tempered through promoting the residential housing rent market.

Lianjia Research Institute, a research platform of the real estate industry, predicts that China's gross income of rent in the rental housing market will reach USD242.7 billion (CNY1.6 trillion) in 2020 and will hit USD697.8 billion in 2030.

 

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Keywords: Rental Market , Beijing , Shanghai , Shenzhen