JLL bets big on rental housing sector

Property investment and management consultancy foresees rising demand from younger employees in major cities

Editor's Note: The Third Plenary Session of the 18th CPC Central Committee held in November 2013 decided to comprehensively deepen the country's reform and opening-up. China Daily is interviewing top executives of well-known multinational companies for their views on the country's socioeconomic development during the past five years.

What progress has China made in streamlining government functions to raise efficiency?

The simplification of business registration and approvals, lower corporate fees, and an increasing move toward transparent and online governmental services have all contributed to a more efficient business environment.

Moves such as last year's relaxation of initial public offering requirements for tech companies, and the development of the new science and technology innovation board are signs of good things to come.

How has the ongoing supply-side reform affected the nation's economic growth and your company's business in China?

Reducing limits on foreign investment and broader financial liberalization are driving demand for office space among foreign insurers and securities firms.

Tax reform, including the introduction of value added tax and China's emphasis on allocating greater financial resources to the private sector, is also helping small and medium-sized enterprises to expand their office presence.

Another element to consider is the demand for high-end industrial facilities and business parks generated by China's ongoing push to upgrade its industrial sector and open up.

What's your comment on China's policy on foreign enterprises and foreign investment?

As China takes on an increasingly significant role in the global economy, many foreign investors have been looking at the feasibility of setting up or further expanding their businesses in China.

Recent new laws and policies to further open up the Chinese market and simplify regulatory procedures for foreign investors have helped to move the needle for these companies.

Over the past years, we have observed that many foreign companies have applied to enter new business fields or increased their focus on the Chinese market.

How has innovation changed economic development and your company's business in China?

China has cultivated one of the largest groups of unicorn firms in the world. Not only do these tech startups represent the central government's determination to lead in innovation, they also play a crucial part in fueling high growth within the economy, as well as our businesses in China.

Among these unicorn companies, some have become very important clients of JLL. Once injected with a large amount of private capital, companies need to look for space with flexibility for further expansion.

In addition, as an active promoter of property technology, JLL is also engaging in multiple levels of cooperation with large tech players in China. We believe that with our expertise in the commercial real estate sector, combined with the capabilities of these strong tech players, China will become the frontier of property technology development.

What measures should be taken if the country wants to further open up to the outside world?

China is currently pushing some of the key factors in attracting foreign capital, such as opening up the financial market further and pledging to fully protect intellectual property. These efforts will help to further strengthen foreign investors' confidence in this market.

We are already seeing a handful of significant deals struck by foreign companies, such as Tesla's auto plant in Shanghai. Efforts to push domestic reform and make the regulatory environment friendlier will further help attract foreign direct investment.

What's your suggestion for China to achieve more sufficient and sustainable economic development?

In the past three decades, China has been able to sustain rapid economic growth through its build out of capital stock in the form of buildings, equipment and other forms of physical capital.

Moving forward, China should concentrate its efforts on maximizing the efficiency of its capital stock by developing "soft" industries, promoting consumption and lifting the industrial sector up the value chain.

Additionally, increasing market transparency will boost efficiency by helping investors to make more informed decisions.

How do you look at China's role in promoting globalization and multilateral trade?

We think that multilateralism is the key to economic globalization. Today, most of the businesses are leveraging the global markets for growth, not just local markets. So, we think promoting globalization is key to making a better business environment, not just for Chinese companies but for international players as well.

What do you think is the next big thing in your industry in China?

China is home to more than 200 million renters. Tier-one cities and some key tier-two cities have attracted large numbers of workers from across the country. However, the single-occupant rental housing market - which particularly caters to the needs of the millennial generation - is short of effective supply.

As a result, in recent years there has been rapid growth in newer rental housing, supported by favorable demographics, rising barriers to home ownership, supportive policies and an influx of capital.

Rental housing will not only serve as a new living option for the young generation, but also gradually change Chinese people's living habits and lifestyles in the longer run.

In addition to establishing a long-term means for the healthier development of China's housing market, the rental housing sector will also accelerate the transformation of real estate developers' business models, from traditional build-to-sell approaches to those focused on integrated development and operation of assets that they can hold over time.

renxiaojin@chinadaily.com.cn

(China Daily 02/15/2019 page9)