With the graduation season just around the corner, a new round of rental season is underway. Recently, many real estate companies have released relevant operating data, among which the rapid growth and profit contribution of long-term rental apartment business have attracted a lot of attention. For example, since the announcement of business profitability in October last year, Vanke Boyu has continued to increase its management scale and opening scale, reaching 241,000 and 180,000 units respectively in the first quarter of 2024, adding 12,000 new units and serving more than 800,000 customers. According to Longfor Group's 2023 annual report, the number of rooms opened for its long-term rental apartment brand Guanyu under Asset Management Channel has reached 123,000, the occupancy rate at the end of the period reached 95.5%, the occupancy rate of houses of 6 months or more reached 96.4%, and the rental income increased by 6% year-on-year to 2.55 billion yuan. In the rental market, long-term rental apartments are opening up more space with a new look.
Demand rises, long-term rentals enter the "fast lane"
"The house was rented in August last year, the lease period was 1 year, and it will expire in a few months, but the landlord suddenly said that he was ready to exchange the house for the house and no longer rent it." Recently, Wang Jing, a 25-year-old Nanjing tenant, had no choice but to continue looking for a new home. But this time her goals changed and she switched from a personal property to a long-term rental apartment. "I paid attention to a few, and the environment and service evaluation were good, so I was ready to go to the scene to compare and settle down. Long-term rental apartments are much more stable, and you don't have to worry about temporary moves. ”
Cheng Juan, the manager of Longfor Guanyu Nanjing Hexi Street, has been busier recently. "The number of inquiries per week is around 40. The occupancy rate here is over 98%, and the lease renewal rate is about 60%. Not only that, but Cheng Juan also found that nowadays, more and more customers have signed two-year contracts. More than 60% of our clients are fresh graduates and graduates for 2 to 3 years. ”
According to the 2023 Blue Book on the Development of China's Urban Long-term Rental Market, there has been a clear trend of younger urban landlords in the past three years. At present, among the owners of first-tier and new first-tier cities, more than 40% of the owners are post-80s. Young renters pay more attention to "housing quality, living experience, and rental period services". "At present, about 40% of rental properties in first-tier cities are clearly mismatched with young people's expectations of high rental quality due to insufficient quality problems such as high age, outdated decoration and aging facilities, and Jiangsu is no exception." Sheng Yexu, director of the Real Estate Comprehensive Laboratory of Nanjing University of Finance and Economics, said that in the context of the current changes in rental groups and needs, the advantages of long-term rental apartments, especially centralized long-term rental apartments, in terms of theme, standardized development and supporting services are more prominent. "When people's life and living concepts begin to change, more and more people begin to choose rental housing instead of buying housing, and the market cake for rental housing begins to grow."
While demand is rising, policy dividends are also being released at an accelerated pace. In 2023 alone, the central and local governments will issue more than 100 leasing-related policies. The "Implementation Plan for the Implementation of the Strategy of Expanding Domestic Demand in Jiangsu Province" also clearly states that it is necessary to vigorously cultivate the housing rental market, support the professional and institutional development of housing rental enterprises, increase the supply of rental housing through multiple channels, improve the long-term rental housing policy, and implement preferential tax policies for housing rental. Many industry insiders said that from changing the green channel of project planning, to increasing financial loan support, to the full opening of public REITs, long-term rental institutions have been greatly improved in terms of housing acquisition, capital sources and operating costs, forming a closed loop of the business model of "investment, financing, management and withdrawal" of housing leasing, laying the foundation for the long-term stable development of the long-term rental market.
Rationality returns, and it is time to cultivate internal strength
"For urban development, the role of the long-term rental market is not only to meet the housing needs of some groups of people and improve the welfare of residents, but more importantly, to help cities retain people and strengthen the population base of urban economic and social development, especially for large cities and megacities, it is an important gate to prevent the outflow of talents and labor." Sheng Yexu said.
Looking back on the development of long-term rental apartments in the past ten years, since the "simultaneous rental and purchase" was proposed in 2015, the capital influx of all parties has accelerated the scale expansion, and the market has once fallen into a thunderstorm quagmire under multiple factors such as tight housing supply, long return on investment cycle, and difficulty in financing loans. At present, after reshuffling and rationally returning, in the new round of competition, the internal cultivation based on quality improvement is becoming the consensus of the industry.
Inside, smart door locks, ergonomic mattresses, environmentally friendly wooden furniture, and a new storage system work together to create a minimalist and light luxury living style; Outside, in the public area, there are audio-visual leisure areas, self-study office areas, reception areas, tea bars, gyms, etc...... Since entering Nanjing in 2017, Longfor Crown Apartment has now reached 7,000 rooms in Nanjing. Chen Hongjin, the person in charge of Guanyu Nanjing, told reporters that in recent years, Guanyu has continuously upgraded and iterated around the quality of decoration, public social space, indoor life scenes, cost refinement, etc., and the product has entered the 4.0 era from the 1.0 era, truly realizing "a warm and bright node for urban youth". Not only that, Longfor Guanyu has also formed process specifications for 20 types of service scenarios, established standards in more than 150 subdivided service scenarios, and created a quality joint inspection mechanism covering 100% of internal and external stores, so as to escort a safe and comfortable rental experience with a standardized service system. More than 2,000 community events are held each year, giving tenants a greater sense of belonging. "After the opening of each of our projects, we will track and review various indicators such as comprehensive operation, customer group, and product in the third, sixth, and ninth years, and at the same time reposition and optimize the overall asset structure in combination with the prediction of future revenue."
In 2018, Vanke Boyu entered the Jiangsu regional market from Nanjing, and in the same year, a total of 9 Boyu stores were opened in Suzhou, Wuxi and Nantong. Up to now, 15 stores have been opened in Jiangsu, with a total of nearly 10,000 rooms. According to the relevant person in charge of Vanke Boyu, in 2023, combined with the changes in market supply, customer demand, and supporting policies, Boyu will further improve its product line. On the basis of youth apartments, dormitory products and family apartments have been launched. Among them, dormitory products have developed rapidly, and more than 10,000 dormitory beds have been provided to enterprises in 10 cities such as Nanjing, Hefei, Guangzhou, Shenzhen, and Foshan; At the same time, in 36 projects in 15 cities such as Kunming, Beijing and Jinan, family rental products have been created to meet the demand for family rental products in the market. At the same time, in combination with the various needs of customers for the rental cycle, Boyu has launched monthly private rooms and daily rental rooms in addition to long-term rental houses, of which more than 300,000 daily rental rooms have been occupied.
It is worth mentioning that the integration of digital and intelligent technology has provided an important boost for long-term rental institutions to achieve high-quality growth. It is reported that in Vanke Boyu, customers can achieve 100% digitization of the house search + rental process. The intelligent operation management system automatically processes high-frequency repetitive and non-essential manual operation nodes by AI Xiaobo, and then intelligently assigns them to 24-hour housekeepers through the "store workbench". In Longfor Guanyu, the six digital intelligent systems, data-based platforms, and nine chain tools focus on "investment, financing, construction, and management", covering 90% of scenarios, and can provide a full range of services and support for tenants, stores, and landlords.
The mission has changed, and the stock era has been fully opened
In recent years, in the context of urban renewal and industrial transformation, the operation transformation and upgrading of many stock houses and parks has not only helped the kinetic energy of urban development shift, but also demonstrated the huge opportunities nurtured by the "stock market". "The operation of long-term rental housing stock is not only an important path for the transformation of real estate enterprises, but also an important breakthrough in the future real estate market." Sheng Yexu said that at present, the historical mission of long-term rental housing has changed, from "preventing real estate overheating" to "helping to destock housing".
In Sheng Yexu's view, at present, the development of long-term rental apartments in Jiangsu is still in its infancy, and the most obvious feature of this stage is "concentration of subjects and diversified financing". "Subject concentration" means that the participants are mainly "national teams", and "diversified financing" means that the financing channels for the opening of rental housing are relatively scattered. Therefore, in the process of helping to decentralize the stock of housing, state-owned enterprises should actively play a greater role. "Other places have already started trying. For example, Shandong Jinan Urban Development Group Asset Operation Management Co., Ltd. acquired 3,000 units of stock housing in Jinan urban area for rental reserve housing. He said that Jiangsu can also try to adopt this development format, with state-owned enterprises taking the lead in acquiring vacant new commercial housing for long-term leasing, and accelerating the development of rental housing while accelerating the destocking of housing.
For private long-term leasing institutions, based on the experience and advantages of asset operation, especially asset-light operation, there is also great potential to revitalize the stock market. In the Hushuguan Economic Development Zone of Suzhou High-tech Zone, there is a collective dormitory that was built as early as 2010. Once upon a time, there were eight employees living in one room, and employees had to walk to the public baths in the park to take a shower. Just this year, Vanke Boyu and the earliest developer of the project, Investment Holding Group, established a joint brand "Yangshan Boyu", which will export products, build and operate Boyu, and upgrade the interior, public area and supporting facilities of Yangshan Apartment in batches. Today, the newly renovated 1,400 units, in addition to more comfortable four-person rooms, are also equipped with a certain proportion of high-quality single rooms. Each apartment has been redesigned and divided into functional areas, with an independent bathroom and furniture and appliances. The park has also added a public activity space, which can provide functions such as a gym, audio-visual entertainment, meeting and negotiation, reading and office, and has set up a youth home to hold community activities on a regular basis. "We have now provided more than 500 beds to six companies." The above-mentioned person in charge of Vanke said.
A few days ago, Longfor Group released a new asset management brand "Xiaoyaozhou Asset Management", and the original long-term rental apartment channel was officially upgraded and renamed as the asset management channel, hoping to connect with the "stock" opportunities in the asset management era. Xiaoyaozhou Asset Management covers six major businesses: long-term rental apartment "Guanyu", dynamic block "Huanfang", serviced apartment "Xiafei Mansion", industrial office "Blue Ocean Engine", women's and children's hospital "Youyou Baby" and elderly apartment "Chunshan Wanshu", and has built a chain composed of space assets such as "housing", "employment", "entertainment", "medical care" and "maintenance", further promoting the quality improvement of stock and incremental investment into a virtuous cycle. As of the end of 2023, Longfor Xiaoyaozhou Asset Management has participated in the revitalization of idle stock in more than 100 cities, assisted the local government in revitalizing stock assets, and also landed a number of benchmark projects, including Guanyu and Blue Ocean Engine. Not long ago, Longfor Guanyu and Longfor Zhichuang Life successfully won the bid for the East China headquarters project of Xiaomi Group. "It is expected to officially open in October this year, with more than 500 units in the first batch. In addition to the traditional products, the project will also launch our first high-end serviced apartment product in Nanjing. Chen Hongjin revealed.
Jiangsu Economic News reporter Hong Shuyi