China Construction Bank Launches Rental Housing Fund

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One of China’s big state-owned banks has launched an investment fund to help drive the growth of the country’s long-term rental housing market.

On 8 November China Construction Bank (CCB) held a ceremony in Beijing to announce the official launch of its Jianxin Rental Housing Fund (Limited Partnership) (建信住房租赁基金(有限合伙)) and the Jianxin Rental Housing Private Equity Fund Management Co., Ltd. (建信住房租赁私募基金管理有限公司).

The signing ceremony was attended by senior officials from the National Development and Reform Commission (NDRC), the Ministry of Finance, the Chinese central bank and the China Securities Regulatory Commission (CSRC).

The Jianxin Rental Housing Fund has reportedly raised funds of 30 billion yuan, with CCB making a contribution of 29.999 billion, and Jianxin Trust Co., Ltd. (建信信托有限责任公司), a fully owned subsidiary of CCB, subscribing for 1 million yuan in funds.

The move coincides with the signing of agreements of intention with sub-funds in cities around China including Beijing, Chongqing, Hubei, Chengdu, Nanjing, Guangzhou and Foshan, as well as the signing of an initial set of purchase agreements for around a dozen projects.

The Fund will initially focus on around 20 projects with assets of over 10 billion yuan. CCB said that following the maturation of these projects, the Fund will use real estate investment trusts (REITs) and other “market-based transfer methods as approved by national policy” to make its exit from them.

“As one of the first banks to engage in rental housing finance operations, CCB has always closely followed the pace of reforms to the national housing system,” said CCB director Tian Guoli (田国立) at the launch ceremony.

CCB said that it would focus on three key areas in future:

  1. Exploring new housing development models that involve both leasing and buying, and cooperating with local governments on the establishment of accompanying sub-funds. Driving more private capital to participate in the development of rental homes.
  2. Establishing a new system for the development of housing financial services, and driving home finance to cover both leasing and purchasing. Exploring new development directions that employ both indirect and direct financing, and integrate equity financing, loan support, leasing operations and listed REITs.
  3. Guiding new concepts in residential home consumption, and promotion the new trend that “houses are for occupation, and leasing is a great option” (房子是用来住的,租挺好). Adding a new cohort of high-quality, low-cost rental housing that is differentiated interns of tiers and types, to satisfy the differentiated needs of different demographics. Driving the concept of home consumption from “for me to own” to “for me to occupy” (“为我所有”向“为我所居”).