China’s rental housing market to hit US$440 bn by 2025
But rental yields for real estate enterprises remain low, due to a string of hefty taxes, says industry expert
The scale of China’s rental housing market is expected to exceed three trillion yuan (US$440 billion) in 2025, while the current market size has eclipsed one trillion yuan, The Paper reported.
In major first- and second-tier cities, the market size could hit 300 billion yuan for long-term rental apartments.
Though the rental housing market is an emerging force and has great potential, it still has many problems, according to Chen Hao, executive director of the China Real Estate Data Academy.
The main issue is that the rental yields for real estate enterprises are low. Chen said in major cities such as Beijing, Shanghai and Shenzhen, which account for 50% of the rental housing market shares, the rental returns are usually about 2% or even lower.
Meanwhile, there is property tax, value-added tax and corporate income tax to be paid. Among the latter, property tax accounts for 12% of the rent and the VAT is about 5 to 6%. The overall tax rate is close to 17 to an exorbitant 18%, Chen added.