Jinan, the Pioneer in Purchasing Property for Affordable Housing, Shows the Way Forward(AI Translation)

【周刊提前读】最早探索存量房“收储”的济南有何经验与挑战？

At the "National Video Conference on Effectively Ensuring the Delivery of Houses" held on May 17, 2024, the Chinese central government introduced the integration of reducing commercial housing inventory with affordable housing policies. This initiative encouraged local authorities to purchase houses from developers for use as affordable rental housing and allocation-based affordable housing, terminology coined as "collection and storage" [para. 1].

In the previous year, eight pilot cities launched a 100 billion yuan rental housing loan support plan facilitated by the People's Bank of China. By the end of March 2024, with over 12 billion yuan in loans, this initiative supported the purchase of more than 100 projects and provided nearly 70,000 housing units [para. 3]. Among these cities, Jinan accounted for a significant share with 53 projects consisting of 30,500 units, financed by commercial bank credits amounting to 14.3 billion yuan [para. 3].

Jinan, the capital of Shandong Province, was notably proactive in this initiative, facilitated by municipal state-owned enterprises: Jinan Urban Development Group (Jinan Chengfa) focused on market-based rental housing, and Jinan Urban Investment Group (Jinan Chengtou) on affordable rental housing [para. 4][para. 5]. On June 12, 2024, a central bank meeting in Jinan aimed to refine the refinancing policies for affordable housing, considering Jinan's leading role and practices [para. 6].

Caixin Weekly visited Jinan to delve into the strategies and challenges associated with acquiring existing homes for rental housing. Market-driven entities in Jinan primarily acquired small apartment projects in city centers and industrial clusters, with an annual return on investment for these projects ranging from approximately 3.5% to 5% [para. 10][para. 12]. Jinan Urban Development Group Chairman Wu Li emphasized the importance of securing low-cost funding to sustain operations, previously unattainable with commercial bank loans exceeding 4% interest [para. 13].

Adjustments in central bank policies have broadened acquisition scopes to include "completed but unsold commercial housing," previously limited to "existing housing" [para. 14]. Jinan Urban Development Group executed 42 projects, covering 25,600 housing units with a total investment of about 18.6 billion yuan. These efforts were facilitated by market exploration and proactive policy adaptations [para. 16][para. 18]. For Jinan City Investment Group, managing affordable rental housing, acquisition of 11 projects totaling 4,997 housing units was backed by loans from the China Development Bank [para. 20][para. 21].

Collectively, Jinan's strategy of acquiring existing housing encompasses bulk public bidding, with acquired properties adhering to specific layout, location, and infrastructure criteria conducive to market demands. This approach aligns with national policies aiming to address housing needs, particularly for new residents and young workers [para. 26]. The success of these efforts is underscored by pilot programs like the Chengfa Chengjia Guoxi Tai Youth Youlai Community Project, indicating robust rental demand in strategic locations [para. 33].

Operational challenges in the rental market include the need for efficient property management and appropriate digital operation platforms, crucial for maintaining service quality and achieving economies of scale [para. 44][para. 45]. The strategic push towards market-based acquisitions seeks to balance between purchase prices and operational sustainability, vital for long-term success in the housing rental market [para. 50][para. 52]. As Jinan's pilot programs moderate housing market absorption, ongoing adjustments and government support remain pivotal in minimizing commercial risks and sustaining apartment yields [para. 79].

Summing up, Jinan's successful implementation of collection and storage policies provides a practicable model for other cities, though sustainable commercial practices and effective policy support will be crucial for broad feasibility and success [para. 80][para. 81]. This comprehensive exploration of Jinan's initiatives reflects broader trends and strategies in China's housing market reform [para. 85].