Chinese Internet giants step into property rental

Photo grabbed from CCTV video

SHANGHAI, China (CCTV) — The Chinese government has been emphasizing the development of the rental market as a way to control the country’s real estate boom.

The shift has encouraged the nation’s mega Internet companies like Alibaba and JD.com to explore apartment leasing.

Alibaba has just launched its property rental service on its payment app Alipay. The service is similar to most rental apps — prospective tenants can find available apartments in suitable locations with suitable prices. But there is one difference — if your credit with Alibaba’s financial arm Zhima is high enough, you can sign the lease without a deposit.

JD.com has plans for something similar.

The Internet giants’ entry into the rental market is expected to make it more transparent.

“The consumers on JD.com and Alibaba are primarily young people born after the 1980s and 1990s. These people are also renters in big cities. So JD.com and Alibaba already have the data on potential renters, along with a history of their transactions and their credit rating. They know the genders, ages, status, and income levels of these consumers. Traditional property rental websites like Lianjia, and Anjuke don’t have that information,” said Cui Lili, the executive director of Shanghai University of Finance and Economics’ Institute of E-Commerce.

The new services are a recognition by the Internet giants of the huge potential of China’s rental market. Agents estimate the demand nationwide in 2016 was up 120 percent from five years previously.

Yet the rental supply grew only 93 percent in that same period.

The government is also encouraging the rental business.

Since the beginning of this year, some 20 cities in China have launched policies supporting their rental markets.

Property rental giant Lianjia predicts the rental market value will exceed 2.9 trillion yuan in 2025 and 4.6 trillion yuan in 2030.

The Internet giants’ dominance in big data would benefit them in the rental market, but experts point out that the government and the companies should first solve supply-side issues.

“I think overall, these platforms probably will have very limited impact on the leasing market. For this market to change, we need the government to step in. I think the [biggest] problem is the supply issue. At the moment in China, the overall supply of the leasing properties is still very limited. So that’s why we’re seeing cities like Shanghai and Beijing, now are trying to address the issue by launching lots of land designated for leasing properties only,” said Joe Zhou, the research director of the real estate services firm JLL China.

The government is paying attention to regulating the rental market as it takes off.

The State Council and the Ministry of Housing and Urban-Rural Development are now planning to launch the first regulations specifically targeting the rental apartment business.

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