Land Sales to Add Over 3,200 More Rental Homes to Shanghai Housing Pipeline

The Shanghai city government is putting up for tender three new residential sites with a planned construction area of just over 210,000 square meters, bringing its yearly proffering of residential land to more than two million square meters, according to a report by local news site The Paper and a notice posted Friday by the Shanghai government.

In a sign of the central government’s determination to boost the supply of rental housing in China’s major cities, all three of the sites, which combined allow for development of at least 3,200 housing units, are required to be developed solely as purpose-built rental housing.

This latest set of sites now brings the total residential parcels made available in Shanghai this year to 29, with the city’s Xuhui District seeing the largest number of projects at seven, The Paper report said.

Pudong, Putuo and Baoshan Sites On Tap

Of the three plots most recently put up for bidding, the largest is in Hangtou town, in the southern part of the city’s Pudong district. The 52,944 square meter plot, has a minimum auction price of RMB 33.9 million, or RMB 3,201 per square meter of built area, and will be able to offer 2,647 rental apartment units, the report said. At least 70 percent of the apartments for rent will be of less than 90 square meters, and the project is required to have a plot ratio of 1:2.

The two other plots are in Baoshan district and Putuo district. The 29,611-square-meter Baoshan project has a minimum bid price of RMB 40.42 million, equal to RMB 7,549 per square meter, with the number of housing units offered for sale at 592. It has a plot ratio of 1:1.8

The Putuo district site is 27,320 square meters and has a minimum bid price of RMB 46.55 million, or RMB 8,510 per square metre of finished homes. It has a plot ratio of 1:2, and the number of homes was not specified.

All three projects are required to be developed as rental properties, with all homes to become part of a “unified management and service platform.” The management and service platform requirement is part of new measures put in place by the Ministry of Housing and Urban-Rural Development (MOHURD) during July, according to the China research team at Savills, with the new rules designed to smooth out the growing pains in the country’s rental housing industry.

Shanghai currently has the largest supply of land designated as purely for development of rental housing, according to the property consultant’s figures, with the city planning to have a total of 200,000 rental units available by year-end.

Stocking Up on Rental Housing

The launching of the multi-family residential projects is in line with Shanghai’s five-year plan to add 700,000 units of rental housing in the city by 2020. The rental apartment push is designed to meet growing demand for housing, and to balance out a market distorted by runaway real estate prices that have made home ownership largely unaffordable.

Through November 26th, Shanghai had put 61 residential sites representing a total construction area of nearly five million square meters up for bidding by developers, according to the report, which was published before these three latest projects were made available on the 29th.

The Paper also cited a report by the research department of Hong Kong-based property agency Midland Real Estate as saying that land sales in China’s first- and second-tier cities increased by a six-year high of 143 percent during the first 11 months of the year, compared with the same period last year.

A total of 282 residential plots were sold in China’s largest cities through November, with most of the plots being sold at their reserve prices, according to the research center.