China property

Shanghai to offer more land exclusively for rental homes development

Shanghai government realising runaway home prices becoming a serious stumbling block to its transformation into a global financial and shipping centre

PUBLISHED : Thursday, 04 January, 2018, 8:02pm
UPDATED : Friday, 06 July, 2018, 4:44pm

Shanghai’s land distribution for residential developments is tilting towards rental homes, after the city auctioned 29 sites to be used solely for just leasing projects over the past six months.

Cen Fukang, a deputy director at Shanghai Planning, Land and Resources Administration, said a bigger chunk of the new 170 square kilometre land supply reserved for residential properties from now until 2030, will now be earmarked for rental homes – in a further move to rein in home prices in the mainland’s most-developed metropolis.

“We will use different channels to increase land supply for rental homes,” he said on Thursday. “Shanghai will also encourage the development of smaller flats to meet housing demand.”

In July, Shanghai was the first mainland city to auction land parcels slated only for rental homes – properties that can be only be created by developers for leasing, rather than sale.

In the second half of 2017, the city sold 29 land sites dedicated to rental homes, on which a combined 40,000 units can be built covering an area of 2.4 million square metres, compared with 1.8 million square metres in 2016.

Cen did not reveal the exact percentage of land slated for rental homes in coming years, but Shanghai currently has 660 square kilometres of land reserved for residential use.

A tale of two cities: how home prices affect Hong Kong and Shanghai’s competitiveness

By 2035, the city is expected to have 830 square kilometres of land parcels for residential developments, he added.

Worried about the short supply of land in the mainland’s commercial capital, homebuyers have been rushing to snap up flats in Shanghai since 2015, with home prices jumping more than 100 per cent in less than 12 months from mid-2015 to early-2016.

The city government stepped in to cap skyrocketing prices in 2016, further limiting home purchases and tightening mortgage rules to curb the frenzy.

The Shanghai government sees lofty home prices as a serious stumbling block to its transformation into a global financial and shipping centre.

Attracting talented professionals from other parts of the country and abroad has become more difficult, as they cannot afford to buy a home in Shanghai.

The authorities have said earlier that it plans to provide 700,00 rental homes by 2020. Those homes for lease are targeted at low-income households, young entrepreneurs looking to set up technology start-ups in the city, and technology professionals, Cen said.

“Rented homes can effectively bring down accommodation costs for young entrepreneurs,” said Zhou Qinggang, chief executive of Chongming Kaixin Farm, a start-up firm dealing with agricultural businesses.

“People like us are adopting taking a wait-and-see attitude towards the policies.”

So far, nearly all the land parcels reserved for rented homes in Shanghai have been sold to the city’s state-owned developers.