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The work of collecting and storing existing housing stock is being carried out on a larger scale.

Recently, Wuhan Housing and Urban Renewal Bureau announced that Wuhan Anjia Affordable Housing Co., Ltd. signed contracts with the Zhaoshang Yuyue Project and the Airport Center Phase III Project, marking the first project in Wuhan to use affordable housing refinancing to purchase existing commercial housing for use as affordable housing. It is reported that the project is an office building, and the entire building is signed this time. The acquisition area exceeds 20,000 square meters, and after renovation and decoration, it can provide more than 500 affordable rental housing units.

On August 19, Changsha Affordable Housing Construction and Development Co., Ltd. announced that it plans to purchase completed but unsold commercial housing as affordable housing.

According to statistics from the China Index Academy, about 60 cities have expressed support for state-owned enterprises to purchase existing housing for use as affordable housing, of which more than 25 cities have issued solicitation notices, and Shenzhen, Changsha, Chongqing and other cities have also followed suit.

Providing new ideas for the disposal of commercial and office stock

It is reported that the signed project of China Merchants Shekou Yuyue Building 3, Building 2, is located at No. 189, Yingwu Street, Hanyang District, with a total construction area of ​​13,200 square meters. The project will be completed in July 2022, with a total construction area of ​​110,000 square meters, of which 40,000 square meters of high-end improved residential buildings have been sold out, and the remaining 42,000 square meters of office buildings and commercial buildings, and Building 3, Building 2 belongs to the office building project, and the current status is 12-story rough housing.

Another project signed this time, the Phase III of the Airport Center, namely the Airport New City Creative Park and Creative Culture Park, was originally planned to be built into office villas and corporate villas. Construction started in September 2021 and will be delivered in June 2024.

Chen Wenjing, director of market research at China Index Academy, said in an interview with the Daily Economic News that this signing is the first case of Wuhan using 300 billion yuan of affordable rental housing refinancing. Wuhan's acquisition of office buildings for affordable housing provides a new path for the revitalization of idle commercial and office assets, which has a positive impact on the entire industry.

In April 2020, Wuhan's "Notice on Allowing the Conversion of Existing Commercial and Office Spaces into Rental Housing" pointed out that idle and inefficient existing non-residential buildings such as commercial, office, and factory buildings in Jiang'an, Jianghan and other places in Wuhan can be converted into rental housing, while commercial and office buildings along the streets in key functional areas of the city and along main roads cannot be converted into rental housing.

Zhang Bo, director of the 58 Anjuke Research Institute, believes that the corresponding cost of converting office buildings into affordable housing is relatively small. From the perspective of the city, a major reason for the continuous decline in office rents is that supply exceeds demand. By converting them into affordable housing and reducing the supply of office buildings, it is actually more conducive to the balance of supply and demand in the market, and will play a certain role in the long-term rental stability of the city.

According to previous estimates by the China Index Academy, the 300 billion yuan of affordable housing refinancing can store a total of about 71.61 million square meters of commercial housing. Based on the 950 million square meters of commercial housing sales area nationwide in 2023, the scale of storage accounts for about 7.6% of new residential sales. Based on the 383 million square meters of residential area for sale at the end of June 2024, the storage will drive the residential area for sale to fall by 18.7%. However, the scale of the storage can be calculated, but the actual effect remains to be implemented.

Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Provincial Institute of Urban and Rural Planning, said in an interview with the China Business Network reporter that in fact, Zhengzhou, Jinan, Chongqing and other places have previously purchased non-residential properties for affordable housing, but they were not purchased in the form of re-lending, but rather used the 100 billion leasing loan plan.

Suggestion: "Establish a pre-selection library to facilitate matching"

The reporter from the China Business Network noticed that since August, Shenzhen, Changsha, Foshan and other places have issued notices, planning to purchase built but unsold commercial housing as affordable housing.

According to statistics from China Index Academy, about 60 cities have expressed support for state-owned enterprises to purchase existing housing for use as affordable housing, and more than 25 cities have issued solicitation notices. In terms of the scope of solicitation, most cities require that the projects be completed and unsold commercial housing projects within the administrative area, and some cities require them to be in the central area.

Taking Shenzhen Anju Group as an example, the scope of solicitation includes residential houses, apartments and dormitories of commercial housing nature, and priority is given to building projects (housing sources) that are whole buildings or whole units that have not been sold and can be closed for management. In principle, the main apartment types of the projects (housing sources) should meet the requirements of the city's affordable housing types and areas (below 65 square meters).

However, although more and more cities have issued stockpiling announcements, the overall progress is currently slow and the pace of advancement still needs to be further accelerated.

Chen Wenjing believes that the promotion of state-owned enterprises' acquisition and storage may face challenges including acquisition and storage prices and supply and demand mismatch. For example, in some cities where real estate developers have great inventory pressure and strong willingness to sell, the demand for affordable housing is relatively limited, and the scale of state-owned enterprises' acquisition and storage may be small; while in some cities where the demand for affordable housing is relatively strong (first-tier and core second-tier cities), the market inventory level may not be high, and real estate developers are relatively less willing to sell existing houses at a discount.

Zhang Bo also mentioned the mismatch between supply and demand. The houses that the local government wants to buy are relatively easy to sell, while the government does not want to buy houses that are difficult to sell. At present, most of the projects with difficult inventory have some flaws. They are not in a bad location or bad transportation. There is no problem with the product hardware itself, but they do not match the demand.

Li Yujia said that both price and project are important factors affecting the speed of acquisition. For example, the selling price of real estate enterprises is high, while the acquisition price of state-owned enterprises is low, which is difficult to match. For state-owned enterprises, selling projects at low prices will face audit problems, such as the loss of state-owned assets. In addition, there are few houses that meet the requirements for the acquisition of affordable housing, such as single-family houses, clear property rights, no debts, small units, and completed projects.

Li Yujia believes that in addition to the problems of the project itself, more importantly, the "acquisition-sales" connection mechanism has not been established, and the "state-owned enterprise-housing and construction" coordination mechanism needs to be strengthened. The acquisition rules, pricing and sales rules of the housing and construction department must be established. In addition, the special working group for ensuring the delivery of houses should coordinate the mechanism.

In terms of project selection, Li Yujia suggested investigating the existing projects on sale, establishing a pre-selection library, dynamically observing the progress of corporate projects, delivery issues, and debt repayment issues, and finally facilitating matching.