China’s CCB makes residential leasing sector its new battlefield
The mainland’s biggest home loan lender says apart from providing renters with funds to pay rent, it will tap on ancillary businesses for growth
A few months after its foray into the country’s underdeveloped residential leasing market, China Construction Bank Corp said it would also offer a host of ancillary businesses to allay investors’ fear of unprofitability in the sector.
Wang Zuji, president of China’s largest lender of housing mortgages, told concerned investors that it would not invest too much real money into the sector, but would introduce a set of related financial services that offered “technical expertise”.
based on that.
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“We have extended loans that help tenants to pay rent, but the largest input is not credit, but a portfolio of services throughout the industry chain,” said Wang in an annual result briefing when asked by investors how much the bank would commit into the sector.
Without directly addressing the question, Wang said “residential leasing is the new priority of CCB this year, and in the future we’ll do more businesses that hinge on the leasing rights”.
CCB launched a “leasing rights” business in January, where landlords are allowed to sell these rights for a fixed period, in most cases for five years, to the bank for a one-off rental payment. CCB then rents out the properties through its in-house or partner agencies to individual tenants. In the future, the lender could package and securitise the rights as assets to be sold to investors.
The central government is pushing to develop its leasing market by scaling up sales of land sites to build rental homes across the country, providing tax breaks for residential service firms and granting tenants equal rights to homeowners.