(Yicai Global) June 22 -- YOU+ International Youth Community has shut down its only apartment rental complex in Beijing as the Chinese long-term apartment leasing operator struggles to make ends meet due to the negative impact of the Covid-19 pandemic on business.

YOU+, which aims to provide low-cost rental accommodation for China’s urban youth, reached an agreement on June 20 with its landlord in Beijing’s downtown Haidian district to withdraw from its rental property there, founder and Chairman Liu Yang told Yicai Global.

For the company to survive, YOU+ needs to cut its losses and downsize in some cities, Liu said. The Guangzhou-based firm still runs 20 rental communities in other big cities nationwide.

YOU+ had invested over CNY40 million (USD5.9 million) in the Beijing apartment complex since 2014, the company said in an open letter to tenants on June 18. But since the Covid-19 pandemic started in 2020 it has lost over CNY35 million.

YOU+ Beijing had defaulted on rent, property fees and overdue fines totaling CNY13.4 million (USD2 million) as of 18 June, according to Phoenix Weekly. As a result, the landlord has decided to terminate the lease agreement and take back the property.

The long-term rental industry is encountering difficulties at the moment, said Hu Jinghui, chief economist at Jinghui Think Tank. On top of the difficulties caused by the pandemic, rents have also increased less than expected in major cities. The Chinese government should introduce more supportive policies to help large rental enterprises as soon as possible, he added.

YOU+ is still able to profit in some cities, a company project manager told Yicai Global. In Guangzhou, for instance, by reducing rents to improve occupancy rates together with reasonable demand, its rental community is still operating as normal.

Editors: Dou Shicong, Kim Taylor