Investing in China Multifamily Real Estate (CBRE) 04 January 2023
Although there were an estimated 150 million people living in rented accommodation in China in 2020, the country’s penetration rate of multifamily rental apartments remained very low, standing at under 2%. However, the evolution of China’s demographic structure; shift in housing consumption demand; and comprehensive government policy support are expected to drive an increase in the number of multifamily rental apartments to more than 12 million units by 2030.
CBRE believes that the sector’s strong leasing fundamentals and potential for asset liquidity and scalability will ensure multifamily emerges as one of the most attractive commercial real estate investment asset classes in China in the next ten years.
With around three-quarters of China’s target multifamily users located in Guangdong, Shanghai, Beijing, Zhejiang and Jiangsu, investors are recommended to target these core markets in the country’s three major coastal city clusters. Site selection should also consider accessibility to public transportation and commute time to workplaces. The main investment approaches to multifamily rental apartments in China include acquisition and renovation of existing assets, greenfield development, and platform collaboration.
Affordable housing possesses both policy and market-oriented characteristics. Exit channels provided by C-REITs; regulatory approval for the conversion of non-residential housing into rental housing; and favourable taxation and credit policies will provide the sector with unique investment advantages.
On the operational side, CBRE recommends investors increase their investment returns through active management measures such as bulk procurement, digitalised leasing and operations systems, floor plan reconfiguration and value-added services.
This report was originally published in https://www.cbre.com/insights/reports/investing-in-china-multifamily-real-estate
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