(Yicai) Aug. 8 -- Shenzhen Public Housing Group intends to buy unsold residential properties in the southern Chinese city and turn them into affordable home rentals, as part of a nationwide effort to shore up China’s real estate market.

Shenzhen Public Housing will buy residential properties, apartments, and dormitories, prioritizing entire buildings or housing units as well as houses under 65 square meters close to transportation hubs, metro stations, and other facilities, the state-backed firm said yesterday. The projects should also have land use rights and all construction-related permits, it added.

The purchases will help to absorb unsold housing stock, thereby improving the supply and demand balance, according to some market insiders, while others believe there may not be enough projects that fit the bill.

China’s central bank announced the setting up of a CNY300 billion (USD42 billion) re-lending fund in May aimed at supporting local state-owned enterprises to buy unsold residential properties. The initiative’s main purpose is to repurpose the properties as affordable housing, as part of a wider effort to address both the national housing glut and growing demand for affordable housing among lower-income groups.

Buying unsold properties is just one way to increase the supply of affordable housing, according to Li Yujia, a housing policy researcher with the Guangdong Urban and Rural Planning and Design Institute. But the authorities will not breach the affordable housing regulations, such as by acquiring larger residential units, solely for the purpose of reducing inventory, he said, adding that as a result Shenzhen Public Housing’s move will have only a limited impact on destocking.

Founded in 2016, Shenzhen Public Housing invests in, builds, and manages affordable housing projects. It has nearly 70 such projects under construction in Shenzhen.

As of the end of last year, the firm had plans to construct 282,000 affordable homes, 122,000 of which were supplied to residents, accounting for about a third of Shenzhen’s total. This year, the city plans to solicit and build 100,000 affordable houses, 65,000 of which will be rented out.

Editor: Futura Costaglione