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--Rental Housing Development Latest Variant on Government Stimulus 
--China Govt Sees Rental Housing Solving A Number of Problems At The Same Time
     BEIJING (MNI) - The Chinese government is betting that development of the
residential rental property market will mitigate the many serious challenges
facing the domestic property market while providing a boost to economic growth
in coming years, property market experts told MNI. 
     In a twist on the Chinese government's oft-used policy of boosting
infrastructure investment whenever economic stimulus is needed, China appears to
be counting on a rental housing boom next year. 
     At the 19th Communist Party Congress last month, Chinese President Xi
Jinping touted the development of the residential rental property sector as a
way to curtail speculation in the domestic property market and put a lid on
price increases that are making housing increasingly unaffordable for China's
growing middle class. At least 48 cities in China have issued policies in
support of development of the sector. 
     "The campaign will definitely influence investment growth," Yi Xianrong, an
outspoken property expert and former researcher at the government-backed Chinese
Academy of Social Sciences (CASS), said in an interview with MNI. "The
government wants its new rental market policies to guarantee investment growth,
ensure housing prices don't rise too rapidly and, at the same time, tackle
people's housing problems."
     China International Capital Corporation projected that the development of
the rental market would provide a significant boost to China's economic growth. 
     The investment bank estimates China's economic growth this year will
average 6.8%, accelerating to 6.9% in 2018 due to robust property investment as
well as strong growth of consumer spending and manufacturing. CICC said the
construction of rental housing units would boost property investment growth by
10% to 15% in 2018, much higher than the 8% to 9% growth estimated for this
     The rental property initiative has gained momentum since its start in July.
By the end of August, 13 large cities were part of a pilot project, allowing the
use of collectively owned land to be developed for rental housing units.
     The development of the rental market means an increase in investment and so
a boost to growth, Yi, who is now an economics professor at Qingdao University,
told MNI. 
     The current rental market campaign is being led by state-owned enterprises
(SOEs), which have better access to government funds and bank lending than do
private developers. In a boost to investment, the SOEs are building new rental
housing units rather than repurposing existing inventories of private housing
     The rental market policies will have little negative impact on China's
private property sales because the scale of rental housing projects is still
tiny compared with the size of the private market, Yi noted. 
     Yan Yuejin, director of E-house Real Estate Research Institute, told MNI
the rental market movement would not change the total amount of property
investment and housing starts since overall housing demand would not change. The
impact is more on the structure of investment, with some transferred to the
rental segment from private development, he said.   
     But Yan, unlike Yi, believes the development of the rental market could
cannibalize some private housing sales, as people who had planned to buy houses
may instead rent a house or apartment under the policies that will make renting
     Chinese property sales have already slowed since mid-March, when the
government started a second round of tightening measures on the sector to rein
in surging price growth. According to the National Bureau of Statistics,
property sales in the first nine months of this year were 2.4 percentage points
lower than in the first eight, implying a significant slowdown in September,
though the growth rate was still 10.3% year-on-year. 
     With Xi and other officials stressing their view that "houses are for
living in, not for speculating on," the development of the rental housing may
help provide a boost that is expected to offset some of the negative impact of
government policies meant to curb housing price growth.
     Yang Xianling, head of the research department of Lianjia, China's largest
real estate brokerage company, told MNI he expects the residential rental
property market would contribute CNY2.6 trillion, or 3.3%, of the expected
overall growth in China's GDP of CNY79 trillion this year. 
     He did his own calculations based on the targeted rental units various
cities are planning to build, measuring their land transaction costs, renovation
expenses, and the driving effect on sectors such as cement, steel, construction
materials, furniture, home appliances, transportation and human resources.
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
--MNI BEIJING Bureau; +1 202-371-2121; email:
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
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