Recent development of China’s rental housing sectorJune 22, 2021 / By
China’s rental housing sector has grown rapidly in the past few years due to strong demand from millennials, high barriers to homeownership and supportive government policies. The total number of rental housing units from the top ten players almost doubled from 356,000 in 2018 to 730,000 units in 2020, mostly concentrated in key Tier 1 and 1.5 cities, based on JLL’s estimate. Rental housing projects that have been operating for over six months achieved an 89%-95% occupancy rate in 2020, according to data from developers and operators. (see figures below).
While the primary source of demand in the rental housing market still comes from fresh graduates and young professionals, we have observed several demand sources emerging recently:
- Senior corporate professionals
- Families choosing to rent homes closer to schools for convenience
- Small business owners/self-employed individuals
- International students in China
- Students of international universities who remained in China (especially in Shanghai) during the pandemic as part of “Go Local” programmes
- Students taking internship or training classes in a different city
This means more diversified tenant groups in China are gradually accepting rental housing products.
Typical products on the supply side are 30-40 square metre studios, providing simple furniture, individual bathroom and small individual pantry. These mass-market products mainly cater to the needs of young professionals. However, over the past two years, China’s mid-to-high-end rental housing supply is also growing to capture the emerging leasing demand from senior professionals, families, or wealthy self-employed individuals. Leading players in the mid-to-high-end segment such as Greystar, Funlive and Base Living are now offering products with a broader choice of room types, including spacious rooms with better layout and design, higher-quality furniture and other facilities. In Shanghai, mid-to-high-end rental housing stock has increased from 2% in 1H2018 to around 8% in 1H2021 as of total rental housing stock, according to JLL data.
Looking ahead, we expect China’s rental housing sector to increase further, both in quantity and quality. Tenant diversity will further grow as an increasing number of developers, investors, and other participants launch new a generation of products to attract a more significant share of young couples and families.
Note: Rental housing in this blog refers to market-based rental apartments with single ownership.
More on 'Residential' in 'China'
- Shanghai’s high-end rental housing market on the riseMarch 18, 2022
- China’s rental housing sector continues to attract investorsOctober 15, 2021
- Beijing’s commercial real estate in 2021February 23, 2021
- Shijingshan – a future winner of Beijing’s 2022 OlympicsJanuary 9, 2020
- Talent flow in China beyond tier 1 citiesDecember 16, 2019