China's sky-high apartment prices and its footloose generation of millennials are fuelling demand for rental apartments, driving investment by foreign private equity funds and Chinese real estate developers. Samantha Vadas reports.
It may have one of the highest rates of home ownership in the world, but China is seeing a big shift in the property market. Sky-high apartment prices and footloose millennials are now fueling demand for rentals and foreign investors are taking note, throwing millions of dollars into so-called youth apartments, aimed at young Chinese white-collar workers on the move. Reuters Clare Jim went to the megacity of Shenzhen to find out more. "Market research forecasts that the Chinese rental market will almost triple by 2025 and data also shows right now 80 percent of the migrants in major cities choose to rent. Many of these people are young professional people aged 22 to 35 years old so this is the new millennium of young professional segment that the youth apartments are targeting, because the young professionals have very strong spending power, high standard of living and they seek the flexibility to move quickly if the job opportunity comes up in another city," she says. Most Youth apartments range from 25 to 45 square metres in size, featuring a common space where tenants can socialise. And Chinese developers are betting big on them, aiming to add hundreds of thousands more to the market over the next two years. "The government is driving this sector by allowing the commercially used property to be redeveloped into these youth apartments and also encouraging banks to make the financial investing easier - so a lot of these investors they rent under utilized assets such as hotels, offices and even warehouses and redevelop them into youth apartments rather than building them from scratch to avoid the high costs," Jim says. And with the home price crunch making the prospects of buying an increasingly distant dream for many young Chinese, the demand for this new type of living space if firmly on the up.