Rented flats targeted at tech-savvy, upwardly mobile, and certainly more sociable millennials are sprouting like mushrooms in the country’s major cities. And Shanghai’s Harbour Apartments typifies the breakneck speed of change now taking place in the sector. The firm – which bills itself a “co-living” flat operator – started operating in 2015 and recently received 400 million yuan ($60.14 million) investment from two firms including Hong Kong-based Gaw Capital Partners. Its target, says 39-year-old founder and now chief executive Huang Haibin, is to create 20,000 rentable co-living units in eight Chinese cities including Hong Kong by the end of 2017, to quadruple that number to 80,000 by 2019, and hit the million mark with a possible float of Harbour within five years. What’s driving that ambition, he adds, are China’s still-skyrocketing home prices in largest cities, pushing more people towards genuine quality on the rental market. Huang felt so strongly about that lack of supply, that he was prepared to leave his high-profile position as president of Star Capital – one of the country’s largest private equity property funds, owned by conglomerate Fosun – to create Harbour. The biggest change now happening in the Chinese property market, he says, is that after seeing the country’s home ownership level race to 90 per cent in recent years – one of the highest in the world – affording your own front door has suddenly shifted to becoming out of reach for many. “More are being forced to rent rooms in flats, as average monthly salaries have been unable to keep pace with mortgage payments required to buy,” said Huang. “But all you can find out there, are very disappointing rooms with no online booking services, no on-site services such as cleaning, or social community facilities. “The demand for affordable rented flats, offering everything included in the price, is huge.” Harbour’s business model is to buy old and underused buildings, and then refurbish them into co-living communities. These will offer dormitory-style or private rooms at monthly rents ranging from 600 to 20,000 yuan (US$90-US$3000). Different from traditional lettings, fully fitted kitchens, laundries, gyms and living rooms will be shared as common space to achieve cost-efficiency, while communal rooms and outdoor areas will also be provided for tenants, “so they can make friends”, he adds. Its clients pay for rooms directly in cash, or online, after which they will receive a password sent to their phone, which will give them access to a room – “as easy as ordering home-delivery food”, says the founder. The operator has already opened 24 “communities” in Shanghai, Beijing, Shenzhen, and Hangzhou, with occupancy rates running at around 96 per cent. It now also plans to extent footprint into Hong Kong, Guangzhou, Nanjing and Xiamen by the end of 2017. “In Hong Kong, most people still rent flats through property agents, but we say ‘why do you need them any more, and why pay commission?’” Huang said. “House rental is something that must be upgraded urgently, in both the mainland and Hong Kong.” Huang says rent increases have seriously lagged behind home price growth in China, creating what it now turning out to be enormous opportunity for his type of business. “Shanghai’s housing prices are close to New York,” he said, “but rental prices are a tenth of the price.” Harbour’s typical clients are young professionals who have been working more than three years and who have annual incomes of around 150,000 yuan, as mainstay products are charged at around 5,000 yuan per month (US$750). As well as individuals, it is also working with local and multinational companies as well as universities, in providing tailor-made dormitory-style rooms. It’s flagship corporate clients include heavyweights such as Starbucks, Tencent, and Alibaba. A raft of measures to encourage the development of the rental housing market have already been put in place by the Chinese government, including allowing the conversion of commercial land and rural land into residential properties for rent. Large property developers, such as China Vanke and Longfor Properties, are also joining the fray, to focus on building more of these types of flat. “There is an expectation that the rental housing market will be worth 5 trillion yuan by 2027, five times current size,” Huang said. Last month, Harbour completed a first round of funding from Gaw Capital and Shanghai-based Trustbridge Partners, and expects relationship with the former, especially, to continue growing long-term into a flat-investment fund. Hubert Pang, managing principal and head of China for Gaw, said growth of such co-living development is very much in tandem with other areas of China’s so called sharing economy – for instance, in rented bicycles, in cities right across the country – which has seen massive expansion.