Chinese banking authorities have encouraged local lenders to extend fresh credit to developers in Shanghai to construct rental homes. The Shanghai headquarters of the PBOC and local branch of CBIRC served as the matchmakers between lenders and developers. This policy adjustment reflects a gradual loosening of the loan restrictions to the property sector by the Shanghai regulators. “Increasing the supply of affordable rental homes for young citizens is an effective way of improving housing conditions for all the people, and hence achieving common prosperity,” the central bank’s Shanghai branch said. Home developers comprising Shanghai Land (Group), Shanghai Chengtou, Dahua Group and Shui On Land signed preliminary agreements with major lenders like ICBC for future credit extensions but the amounts were undisclosed.
As per SCMP, Chinese banking authorities rarely encourage commercial lenders to grant loans to specified firms unless their projects are of national interests. “But projects related to rental homes are not subject to the austerity measures… After a year of tight credit conditions, some of the developers, for example those state-owned companies engaging with developments to offer young talent affordable rental homes, will have access to funds to rev up construction”, said Wang Feng, chairman of Ye Lang Capital. Shanghai announced plans to build 220,000 new rental homes by 2025, an increase from the total number of rental units constructed in the last five years by more than 45%.
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