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July 6, 2017

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First ‘rent-only’ housing project

SHANGHAI’S land authority has released two parcels designated solely for residential leasing, the first project of its kind ever allocated in the city to developers.

It is part of local government moves to tap new options to address the accommodation needs of those who find home prices unaffordably high.

Starting prices for the larger lot, in Zhangjiang, Pudong New Area, and covering 65,007 square meters, is 723.9 million yuan (US$106.3 million).

That works out to a gross floor area price of 5,568 yuan a square meter, a statement posted on the city’s official land website said late on Tuesday.

The other development, 28,513 square meters in outlying Jiading District, has a starting price of 424.2 million yuan, or 5,950 yuan a square meter.

Developers are required to hold these two lots for 70 years and properties cannot be sold, the land watchdog said.

“The Zhangjiang plot seems no surprise as a blueprint on Zhangjiang Science City released in May has made it very clear that all new residential units built in the area in the future should be rental properties,” said Lu Wenxi, senior manager of research at Shanghai Centaline Property Consultants Co.

“As for the Jiading parcel, I believe that it should reflect local government’s hope to attract more young talents to the district where industrial restructuring and upgrading are currently undergoing extensive development.”

Only a limited number of developers, probably leading players with plenty of capital, would likely express interest in the two parcels. And a rather low premium should be expected for the auction, industry analysts said.

Currently, developers of housing land plots are usually required to hold 15 percent of their total space for renting with the rest being allowed for sale on the open market.


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