On November 17th, the Beijing municipal government released the “"Opinions on Further Strengthening the Leasing of Housing Using Collective Land", which detailed plans for a collective rental housing plan. Beijing is the second city in China after Zhengzhou to pilot such a program.
Beijing: 1,000 Hectares of Land to Add 400,000 Rental Housing Units
According to Central Plans’ Chief Analyst, Zhang Dawei, a total supply of 1,000 hectares of collective land should allow for about 300-400,000 rental units.
Dawei added that Beijing currently has about 2.5 million rental homes, and this new project should provide a 10-15% increase to supply.
The Beijing local government already previously announced that it had plans to build around 500,000 rental units over the next five years, with most of it being done through collective construction.
Industrial Parks, Transportation Hubs to be New Construction ‘Hotspots’
Since the new units are to be used for home rentals, existing commercial areas, transportation hubs and surrounding facilities are going to be key deciding factors on where to build.
The “Opinions” document stipulates that collective housing construction sites should be located in areas that promote employment. Planning is also required to be consistent with standard urban planning concepts, such as the availability of transportation infrastructure and public services.
Future Impact
Beijing has already piloted several collective home rental projects. Since 2011 Beijing has had five experimental test sites, including in Chaoyang District, Haidian District and Changping District. These projects have amounted to a total of 1.28 million housing units.
Market analysts estimate that if 1000 hectares worth of housing units enters the market on time, it will lead to a better equilibrium between supply and demand.
MaxviewRealty’s Analysis:
This policy is intended to increase the supply and quality of available housing in Beijing. The plan will directly benefit local tenants. China’s large scale housing initiatives only account for about 2% (with the remaining 98% coming from individual landlords). In some developed countries this percent is around 20-30%. In Japan, for instance, 80% of the market is dominated by institutional housing programs. Only 20% stems from direct leasing by individual landlords.
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