2023 is a critical year for the "14th Five-Year Plan", and in the face of the economic development situation and the characteristics of the real estate market development stage, the country will focus on building a new model of real estate development and implementing the "three major projects" such as affordable housing. The rental housing industry is an important part of the affordable housing in the "three major projects", and the housing rental policy at the national level maintains continuity, and continues to deepen in many aspects such as financial support, raising, and market supervision; The scope of policy influence continues to expand, and more and more provinces and cities have introduced relevant industry policies to promote the development of the local housing rental market; The housing rental policies in first-tier cities have been continuously deepened and refined, fully reflecting the characteristics of "one city, one policy".
The rental housing market is facing a two-line advancement in scale and quality, and while the number of people is increasing, the quality of living has also been greatly improved. The first anniversary of the listing of the public offering of affordable rental housing REITs, the landing of the fifth public offering of rental housing, and the launch of private real estate placement, the financial thrust has once again provided a strong impetus for the market, not only building a complete business ecosystem, but also building a new platform for the recycling and reinvestment of capital, and strengthening the ability of asset management and sustainable development of the industry. At the same time, rental housing is gradually integrated into the urban fabric, injecting new vitality into urban development in terms of layout density, institutional management and close integration with urban renewal projects. In addition, the connotation and extension of rental housing services are also constantly expanding. With the continuous improvement of the quality of rental housing services, the original surprising service has now become the standard, thus continuously promoting the development of service quality in the rental housing market to a higher level. Overall, 2023 is not only a challenging year for China's rental housing market, but also a year full of opportunities.
Market supply
There has been a significant increase in phases
As of December 31, 2023, there were 3,019 institutionally operated centralized rental housing projects in 16 hotspot cities monitored by ICCRA, with a total of 917,801 units (rooms), a year-on-year increase of 549%, some cities have achieved geometric growth.
The main reason for the significant increase in phases is that due to the impact of the epidemic, the market entry time of projects that should be delayed in the past three years (2020-2022) year by year, and most of them are concentrated in 2023; At the same time, affordable rental housing has been raised, and a large number of stock projects have been transformed into affordable rental housing.
The supply of new construction and renovation increased at the same time, resulting in an instantaneous surge in supply. However, with the decrease in the supply of special land for rental housing in various places, the scale of market supply should tend to be reasonable in the next few years.
Table Changes in the supply scale of centralized apartments in hot cities
(2022 vs 2023).
Data**: ICCRA database
Rental performance
Rental levels in the overall market have generally declined
With the exception of Beijing, all other cities have different levels of rent**, with an average range of 223%。On the one hand, it is affected by the overall economic environment, on the other hand, it is due to the increase in market supply, especially the acceleration of affordable rental housing, which not only soars in volume, but also its rents are lower than those of market-oriented rental housing of the same location and quality, and the flattening effect is prominent.
Data**: ICCRA database
Occupancy performance
The overall market declined slightly
The bottoming effect is obvious in the demand anchoring area
Since 2022, the pace of supply, the progress and scale of special land for rental housing have all dropped significantly, and this trend will continue in 2023. The transformation of stock has become an important measure to broaden the channels of rental housing. In addition, the average occupancy rate of the 16 hotspot cities monitored by ICCRA edged slightly to 89Around 5%, 81% of the projects are located in the demand anchor area in the EILT model.
Table 16 City Occupancy Rates
Data**: ICCRA database
Market-focused analysis under the EILT model
Starting from 2023, ICCRA will conduct a cross-analysis of the rental housing market in 16 hotspot cities according to the two dimensions of EILT model and product line type, aiming to more intuitively analyze the market performance and investment value of each city and region.
Figure 16 Map of the city eilt
Data**: ICCRA database
The rental efficiency and occupancy rate of high-end apartments remain relatively high, and the location value advantage is highlighted. From the perspective of market performance, the rent efficiency advantage of high-end apartments in various cities is still significant, and the occupancy rate has decreased slightly year-on-year, but the decline is not obvious.
Rental communities are the most popular product types in 2023, and according to incomplete statistics, there are more than 20,000 rental community rooms in Shanghai this year. Affected by the location of the supply area, most of the urban rental community projects will be concentrated in the level 3 area, so it will also have an impact on the rental efficiency. However, the rental community projects are basically new projects, with high quality and complete supporting facilities, which are welcomed by the market, and the occupancy rate is not inferior to that of youth apartments.
Table 16 Rent efficiency in the demand-anchored area of the city
(Unit: yuan square meter days).
Data**: ICCRA database
Table 16 of the occupancy rates of the demand anchor area
(Unit: yuan square meter days).
Data**: ICCRA database
There are five major trends in the industry outlook for 2024
Looking forward to 2024, there are five major trends worth paying attention to in the industry: the development of institutionalized centralized apartments will continue to grow, the degree of branding will be further improved, the product types will be more segmented and cover the comprehensive living needs of tenants, industry participants will strengthen the concept of ownership and operation, and digital advantages will emerge. In addition, as the REITs market continues to grow, the relevant taxes and fees are reduced, and the assets are reduced, the business model of the housing rental industry will become clearer. However, investment institutions will still face many challenges in the process of operation. How to effectively address these challenges and pain points will become a key topic for the rental housing industry in 2024.