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China’s graduation season gives modest boost to home rentals in tier-one cities

(Yicai Global) July 8 – Apartment rental markets in China’s tier-one cities got a bit of a boost from college graduation season, but are still lackluster compared to a year ago, while Markets in third and fourth tier cities and counties remain tepid.

In China’s top 100 cities in the second quarter, rentals rose 1.3 percent from the first three months of the year, while the time from listing to renting decreased, according to data from the Beike Research Institute.

“Apartments along Beijing’s Third Eastern Ring Road are in short supply at the moment as there are fewer units available for rent, while the number of people hoping to live in the area increases as new graduates enter the market. market,” said a sales manager at an outlet. Maitian real estate brokerage in the area.

China will have about 10.7 million university graduates this year, an increase of 1.7 million from last year, surpassing the 10 million mark for the first time, according to figures from the Ministry of Education. .

The image of home rentals is uneven. While major cities have hotspots, the market is not as buoyant as at the same time in previous years, Yicai Global found, with some landlords in first-tier cities even willing to cut rents.

“The expectations of apartment owners in this area have been lowered by the pandemic and other factors,” said a 5I5J employee who works in Beijing’s Haidian district, a hotbed of tech startups.

Monthly rents in the area were generally about CNY 400-500 ($60-$75) lower than a year ago, partly because of the hit to the local economy from the pandemic and partly because the relocation of large companies.

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“Since ByteDance’s Beijing office moved to a different area earlier this year, a large part of its staff followed suit and the number of empty apartments in this area has skyrocketed,” the 5I5J staff member said. . “In previous years, there would be no more apartments for rent here in mid-June. But not this year. There are still many left. »

Rents rose more slowly in second-tier cities than in first-tier cities, and even fell. In major second-tier cities in eastern China such as Hangzhou, Ningbo, Hefei and Nanchang, some landlords in key neighborhoods have cut rent to avoid having vacant properties in their hands.

In small towns, the market is less inspiring. “I have an apartment to rent,” said a landlord in the eastern port city of Ningbo. “Even though it is near a subway station, the rent will probably be CNY 500-600 lower than last year.”

Rental markets in third- and fourth-tier cities and smaller counties were even more depressed due to their lesser appeal to college graduates. A senior real estate salesman in Lujiang County, Anhui Province, said the majority of his customers are mainly farmers coming to the township to find work.

“Graduation season has very little impact here, and local apartment vacancy continues to rise,” he said. Industry data supports his experience.

Rents in first-tier cities rose 1.5% in June from May to CNY 87.92 ($13) per square meter, according to data from a real estate search engine think tank. Zhuge. The increase was 2.8% from a year ago. Small towns are lagging behind. In large and medium-sized cities, rents increased by almost 0.4% in June compared to May. But the number remained unchanged in a year-over-year comparison.

In second-tier cities, monthly rents averaged CNY 31.69 per square meter, virtually the same as in May and down 1.3 percent from a year ago.

Editors: Tang Shihua, Emmi Laine, Xiao Yi