Chinese pipeline of rental homes worth US$77 billion could create huge property asset management opportunities, firm says

Name: 40 years of opening up and reform: How property became a driving force in the economy
Uploaded: 2021-05-03T23:30:14.000Z
Duration: 1 min 58 s
Description: 40 years of opening up and reform: How property became a driving force in the economy

We want to evolve into China’s own CapitaLand, says chief executive of Cifi Holdings Group’s rental homes unit

Imminent launch of Reits in China is also likely to support rental home operators’ expansion

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Shanghai currently needs another 4 million rental units. Photo: Bloomberg

Daniel RenandPearl Liu

Published: 7:30am, 4 May 2021Updated: 7:04pm, 4 May 2021

China is expected to build rental homes worth 500 billion yuan (US$77.2 billion) over the next five years, which could create massive opportunities in property asset management for the country’s leading developers.

“With strong government support and rising demand, we see great opportunities in developing rental homes and creating a large-scale asset management business to evolve into China’s own CapitaLand,” said Hanah Zhang, the chief executive of Cifi Holdings Group’s rental homes unit. CapitaLand, Singapore’s biggest developer and real estate fund manager, manages commercial and lodging properties worth more than US$80 billion.

Beijing has earmarked 10 per cent of fresh residential land supply for the constructions of rental homes under the 14th five-year plan, which runs between this year and 2025. In March, Chinese Premier Li Keqiang said in a work report to the country’s top legislature that the government would increase the supply of subsidised rental homes and cut taxes to ensure the well-regulated development of the market.

China’s leadership has since 2017 been encouraging the growth of a leasing market to accommodate new urban immigrants lacking the means to buy homes because of lofty prices.

“Professional property asset managers will be in high demand as more rental homes hit the market,” Zhang said, adding that the homes built for leasing are expected to be worth 500 billion yuan. Cifi, Longfor Properties and China Vanke currently lead the country’s rental homes market. Zhang said the company planned to triple its portfolio of rental homes to 30 billion yuan in three years, and aimed to have total assets worth 100 billion yuan under management over the next decade.

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40 years of opening up and reform: How property became a driving force in the economy

According to global property services firm JLL, more than 200 million people in China are currently renters. Shanghai, the country’s most developed metropolis, currently needs another 4 million rental units, a number that exceeds supply by far.