Vanke to focus on leasing business this year
March 13, 2017 Category Real estate, Weekly
China Vanke has vowed to give priority to its leasing business this year as the developer tries to cash in on the country’s rising demand for rental properties amid the increasing unaffordability of urban homes. Board Secretary Zhu Xu said the company will offer 16,000 leasable apartments under its Port Apartment brand. Lu Kehua, Vice Minister of Housing in February said about 160 million people, or 21% of urbanites, are renters, with the majority recent college graduates and migrant workers. The rental property market is estimated to be worth CNY1 trillion by 2020, according to CICC. However, China’s rental yields are low due to soaring real estate prices, and a lack of suitable buildings. Brokerage Guotai Junan notes that rental income growth has lagged behind home prices. Rentals in first-tier cities yield about 2%, in line with the savings deposit rate at local banks. The yield means that investors will have to wait 60 years to recover their investment. Rental income only accounted for 2% of Chinese developers’ total income in 2015, according to Guotai Junan.
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