Dawn of long-term rental home market may enthuse Gen Z
Over the past few decades, many Chinese people thought it was necessary for a newlywed couple to own a home by their wedding day.
So, I asked a young woman preparing for her wedding later this year the same question－well, then, is it necessary? Her answer surprised me. She said she and her would-be will live in a rented home.
The couple's decision epitomizes the choices that young people now have to cope with the current tough living conditions, particularly in cities. Coping also involves discarding conventional wisdom and stereotypes. More and more Chinese youngsters, it appears, are in favor of living in a rented home.
"To have my workplace, home and favorite shopping mall within a 1-kilometer radius is bliss. The time such an arrangement can save would allow me to have an easier life, regardless of my busy work schedule," said Zuo Meng, 25, who works in the financial services sector.
Like Zuo, Bai Chen, 28, an IT engineer at a privately owned company, chose to live with her fiance in a rental home in the city center. Owing to high housing prices, Bai leased a comfortable and well-appointed flat.
"There are more than 200 million Chinese people living in leased homes. The population will expand as urbanization goes on and people keep flowing into megacity clusters," said Xie Chen, head of research with CBRE China.
Highlighting both home rentals and home purchases is an important part of China's efforts to satisfy housing demand. Also, it will help establish long-term smooth functioning of the property market, Xie said.
Given high new home prices in China's largest cities where purchases are mostly done by long-term residents or "locals", nonlocal residents account for 77 percent of first-tier cities' rental housing customers. The figure is 15 percent higher than that of lower-tier cities (61.9 percent).
The figure in Shanghai is as high as 86 percent, according to a survey on lodgers in the nation's four biggest cities. The survey was jointly conducted by the housing and community institute under Tsinghua University's School of Architecture and the Beike Research Institute, which is part of KE Holdings Inc, a Chinese platform for housing transactions and services.
Married couples account for a bigger chunk of tenants of rental housing in top-tier cities than in other cities. This trend is most evident in Beijing where up to 30 percent of tenants are married couples. Singles take up the lion's share of tenants in top-tier cities, said the report.
This has encouraged industry experts to foresee a "golden decade" for the rental housing market ahead, with about 260 million Chinese people estimated to live in rented homes.
The market size is estimated to reach around 10 trillion yuan ($1.57 trillion) by 2030, said a blue paper on Chinese urban leasing published by the Ziroom Research Institute.
As the younger generation forms the main home leasing group, quality upgrades of accommodations have become an important element in top-tier and second-tier cities' rental markets, Xie said.
"The new-generation tenants are looking for all-around upgrades in their rented apartments, in terms of safety, services, and facilities related to health, technology, social functions and even more. However, professionally managed rental housing now accounts for a mere 1 percent of all homes available for leasing," said Xie.
Yao Yao, head of research for JLL China, said there are many things that can help ensure a tenant enjoys equal rights as a homeowner. Also, there is a need for certain mechanisms to ensure rents don't surge every year irrationally.
This year's Government Work Report said China will move faster to develop the long-term housing rental market. This shed light on the sector's potential to make steady progress and the optimistic outlook for the development of long-term rental organizations, said China's long-term rental enterprise Ziroom.
The era of leasing a high-quality urban flat that is as good as one's own home may be quietly dawning upon China's younger generation.
