China Expects Long-Term Rentals to Triple in Revenue by 2025
Liao Shumin
/SOURCE : Yicai
China Expects Long-Term Rentals to Triple in Revenue by 2025

(Yicai Global) July 27 -- China's overall revenue from long-term apartment rentals is expected to grow threefold to surpass CNY3 trillion (USD440 Billion) by 2025 from CNY1 trillion at present, says a leading industry body.

First and second-tier cities will account for CNY300 billion of the sector's income, Cai Yun, the secretary-general of China Real Estate Association's commercial and tourism committee, said at the Asia-Pacific Real Estate Rental Summit 2018 in Shanghai.

Cai expects future market growth to feature two key changes, namely, the increased supply of rentals coupled with a raft of policies related to sectoral loans, equal rights for rental tenants and housing owners as well as residence permits for tenants.

The government set out plans last year to foster the housing rentals, especially those of a long-term nature while backing professional and institutional housing rental enterprises and accelerating rental-backed securities.

The market remains beset by problems including low rates of return on rentals, said Chen Sheng, executive president of the China Real Estate Data Academy. Rental shares in first-tier cities such as Beijing, Shanghai, and Shenzhen account for less than half of the entire rental market.

Taxes paid by leasers include a 12 percent property tax, a 5 percent to 6 percent value-added tax after deduction and company income tax, accounting for 17 to 18 percent of the total tax rates. Financial costs for leasing firms are also high. Asset-backed security financing generally brings high capital costs while real estate investment trusts can resolve the problem of low rental yields that make it difficult to cover high costs.

Editor: William Clegg

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Keywords: China Real Estate Association , Long-Term Rented Apartment , Rental Yield