A China Construction Bank booth at a financial exhibition in Beijing. [Photo provided to China Daily]
Commercial lender launches new loan product for tenants in Shenzhen
China Construction Bank Corp on Friday joined hands with major real estate developers to provide long-term housing for rent and launched a loan product for tenants in Shenzhen, Guangdong province.
Taking a strong foothold in mortgage loans, the second largest commercial bank by assets in China signed contracts with 11 companies, including large developers such as China Vanke Co Ltd, China Evergrande Group and Country Garden Holdings Co Ltd, to provide 5,481 houses for long-term rent in Shenzhen.
In the initial stage, China Construction Bank will lease the houses to corporate tenants. It signed contracts on Friday with 11 companies and public institutions, including Shenzhen-based automaker BYD Co Ltd and EVOC Intelligent Technology Co Ltd, which are involved in research, development and manufacturing of special computer products.
Commercial lender launches new loan product for tenants in ShenzhenThe bank will provide qualified corporate and individual tenants with credit of up to 1 million yuan ($150,000) for rental housing at benchmark lending rates of China’s central bank, with a maximum loan period of 10 years. Currently, the one-year benchmark lending rate is 4.35 percent.
Li Zhongdong, deputy general manager of CCB’s Shenzhen branch, said: “The housing market in China is overdeveloped. For many people, houses and apartments have deviated from their original function as places for living to serve as investment targets.
“Previously, sales was the only way for developers and investors to get their money back. As landlords will select the best timing to sell their houses, tenants could rarely find high quality houses for long-term rent, which has become a weak link on the supply-side of the housing market,” Li said.
CCB hopes to join hands with real estate developers to explore solutions to this problem by making supply-side reforms through financial measures, he added.
The bank will keep seeking houses for rent through cooperation with more developers, launch more rental-related financial products, and form a subsidiary at the headquarters level to operate rental housing platforms in pilot cities selected by the government.
Chen Zhilie, board chairman of EVOC Intelligent Technology, welcomed CCB’s efforts to encourage stable and long-term rental housing.
“Industrial companies generally saw a hike in operational costs in recent years, which was caused in part by rising housing prices. Through cooperation with CCB, corporate tenants will be able to retain more talents,” Chen said.
The central government issued a notice in July, selecting 12 large and medium-sized cities including Shenzhen to accelerate development of the rental housing market.
To limit housing speculation, China has tightened home purchase restrictions in multiple cities. Under the restrictions, some real estate developers are willing to offer part of their housing inventory for long-term rent to ease capital shortage.
Zhu Haifeng, vice-president of Xin Hai Holdings, a Shenzhen-based developer, said: “CCB acquired from our company a right to lease 600 homes and agreed to pay 25 years’ rent at once, thus helping us with capital recovery.”
Apart from CCB, several other commercial banks such as Bank of China Ltd and China CITIC Bank Corp Ltd, as well as internet giants such as Alibaba Group Holding Ltd and JD.com Inc, also announced their plan to enter the rental housing market.