China's rental housing market on the up

Favorable demographics, rising barriers to home ownership, supportive government policies and an influx of capital are jointly boosting the growth of the rental housing market in China, recent research released on Tuesday by global real estate consultancy JLL has found.

By 2022, some 750,000 newly-completed rental apartments will be available in Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou and Chengdu, compared with the total of stock of around 135,000 rental housing units in the six cities as of the first half of 2018, according to JLL, which focuses its study on market-based rental apartments with single-ownership and lease periods upwards of six months.

"After rapid expansion over the past few years, China's rental housing sector is now set to enter a 'lift-off phase' after passing its 'introductory phase' and through most of its 'growth phase'," said Daniel Yao, head of research at JLL China. "How long it will take the market to pass through the 'lift-off phase' of rapid growth and eventually reach a final 'mature phase' will depend on a number of factors."

JLL identified five main catalysts, namely macro fundamentals, tenant rights to public services, asset acquisition and costs, financing and tax, and transparency, for future development of the rental housing market in China, after tracking the previous evolution of mature markets in the US and Japan.

In terms of investment prospects, the report has pointed out that rental housing in China still remains an emerging alternative asset type and the market is just beginning to take shape.

Boasting the largest stock of rental housing among the six cities with about 34,900 units spanning 160 projects as of the first half of this year, Shanghai, fuelled by economic and demographic fundamentals, will become a key battleground for rental housing investors, according to JLL.