President Xi Jinping famously noted that “houses are for living in, not for speculation”, a statement which perfectly characterizes the stream of housing regulations from Beijing over the past year.
Recent regulations have curbed lending, raised requirements for home purchasers, promoted renting, and increased transparency. The message was clear; Speculation was out and renting was in.
Property developers, management companies, and private-equity investors have all eagerly moved to increase their footprint in the rental housing sector.
Lianjia, which has a portfolio of half a million rental apartments in nine cities, is the latest company to announce plans to increase its efforts in the rental market.
It has decided to take advantage of its expansive customer base to promote its new rental management service.Lianjia will take home a nice cut of the rental price, while customers will be able to enjoy a stable income, free of the hassles of self-management.
If China does implement its planned property tax over the next couple of years, the service could see a boost from tenants who can no longer afford to see their properties sit empty.
Vanke, a property developer, has also jumped into the market, and it already has a management portfolio of 100,000 properties.Country Garden and Longfor Properties have also announced plans to tap into the sector this year.
At present, rental apartments, which have a low yield, are not considered to be very profitable. But, for many developers, the move is in line with long-term strategic thinking. As the market matures, profits for developers are expected to skyrocket. Benefits for tenants, including higher quality and better management, are also expected to tick up.
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