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Shangh's Rental Housing Sector Draws Global Attention for Robust Fundamentals in 2023
Over the past few years, Shangh's rental housing sector has witnessed a significant expansion, fueled by favorable demographic shifts, supportive government policies, and the challenging barriers to homeownership faced by migrants. According to Jones Lang LaSalle JLL's data, as of December 2023, Shangh boasts approximately 187,000 units across nearly 500 rental housing projects, marking a 57 increase compared to 2022's total stock.
Despite the concentration of new supply in suburban areas, these developments have garnered significant market interest due to their convenient access to public transportation such as metro stations, diverse room offerings, and comprehensive amenities like fitness centers, communal spaces, and mini-markets. These features align well with the evolving living needs of tenants today.
As Shangh's economy and dly life returned to normalcy following the pandemic, its rental housing sector experienced a strong rebound in leasing activity compared to 2022 levels. While new rental housing units absorbed quickly despite the notable increase in supply, occupancy rates for operating projects those with at least six months of operation have remned robust, hovering around 89 to 90.
The leasing demand surge was particularly fueled by white-collar workers, freelancers, and students, who found that these high-quality rental options met their needs more effectively than traditional housing solutions. This year saw a notable increase in interest from families with children and mid-to-senior-level professionals transitioning from the build-to-sell market to long-term leasing arrangements.
The record net absorption of 51,000 units by the of 2023 marked a significant jump from 2022's net absorption figure of 21,000 units. As higher-quality rental properties entered the market, there was an increasing demand from these professional groups, suggesting that Shangh's rental housing sector is poised for long-term growth.
Looking ahead to future developments, JLL forecasts a total supply of approximately 164,000 rental housing units between 2024 and 2025. Pudong, Minhang, and Qingpu districts are expected to collectively account for 58 of Shangh's rental housing stock by the of 2025. The majority 64.7 of new supply will be located outside the city's Outer Ring Road. Another 19.6 will be situated between the Middle and Inner Rings, while 14.2 will be found in areas between the Outer and Middle Rings. Unfortunately, there is limited future supply within the Inner Ring Road, contributing only 1.5 of total new units.
As the sector's fundamentals remn strong and its ability to deliver consistent operating performances through economic cycles becomes apparent, Shangh's rental housing market continues to attract both domestic and foreign institutional investors seeking opportunities for value-added or opportunistic strategies in pursuit of higher returns. In 2023, there were 14 en-bloc transactions with a total volume reaching RMB7.2 billion approximately $986 million, marking an increase of 18 year-on-year.
Looking into the future, Shangh's rental housing investment market is anticipated to remn vibrant in 2024 and beyond as more investors capitalize on the sector's healthy fundamentals and growth potential.
*For a closer look at the robust demand for Shangh’s rental housing market, please refer to the sources below:
Data Source: Jones Lang LaSalle JLL Research
This article is reproduced from: https://www.jll.com.sg/en/trends-and-insights/research/shanghais-rental-housing-sector-in-the-spotlight
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