State-owned capital acquiring existing commercial housing for use as affordable housing is spreading in more and more cities.

　　News on September 12 shows that Yinchuan is for the first time carrying out the work of acquiring completed existing commercial housing for use as affordable housing. From September 9 to 28, it is soliciting completed existing commercial housing citywide, within the 'ring expressway range' of Yinchuan's urban area, covering entire buildings or entire units of completed, unsold commercial housing (residential and apartment).

　　According to local plans, Yinchuan will raise 2,764 units of affordable housing this year, using a 'rental + sale' model to solve housing difficulties for more low-income urban groups and young people.

　　Similarly, news on September 9 shows that Hefei Anju Group plans to acquire completed existing commercial housing for use as sale-type or rent-type affordable housing, and is now soliciting completed existing commercial housing within the corresponding administrative areas of Hefei, Anhui Province.

　　On September 6, Tai'an also issued the 'Announcement on Soliciting Completed Existing Commercial Housing for Use as Affordable Housing.' Tai'an Taishan Zhixin Real Estate Management Co., Ltd. serves as the acquisition entity and, at reasonable prices (with the replacement price of affordable housing in the same area as the reference upper limit), solicits completed and unsold commercial housing in the main urban area for use as affordable housing.

　　According to incomplete statistics from market institutions, more than 30 cities across the country have issued announcements soliciting housing sources, and more than 60 cities have stated support for state-owned enterprises to acquire existing commercial housing for use as affordable housing.

　　Judging from the current announcements in various places, the acquisition of existing housing has certain standards for the size, quality, and supporting resources of the housing.

　　For example, Yinchuan requires that the building area of a single unit not exceed 120 square meters; the entire building or entire unit of the project has not yet been sold, has completed completion acceptance filing and first registration, and has obtained a commercial housing pre-sale permit; property rights are clear, without disputes, and the property is tradable; the project meets the lending requirements of financial institutions; and the surrounding supporting facilities of the project are complete, with convenient transportation and full related amenities.

　　Hefei is similar. In terms of housing form, it mainly consists of entire buildings and entire units, which can achieve closed management. At the same time, according to the standard of 'mainly existing housing, prioritizing fully furnished units,' the housing should be completed housing that has undergone completion acceptance, with complete project procedures, clear asset-liability and legal relationships, eligible for real estate ownership certificates, and able to meet the lending requirements of financial institutions. Acquired housing must also meet requirements such as convenient location and transportation, relatively complete supporting facilities, and proximity to core regional development areas.

　　Regarding acquisition prices, Yinchuan stated that the acquisition price uses the replacement price of affordable housing in the same area as the reference upper limit, that is, the sum of allocated land cost and construction and installation cost plus no more than 5% profit. Tai'an's standard is the same. Hefei's acquisition price for existing commercial housing shall not exceed the replacement price of affordable housing in the same area, with the upper limit for rent-type affordable housing set at the appraised price by professional institutions.

　　The raising and construction of rent-type and sale-type affordable housing is a long-term project involving social livelihood.

　　According to a Huatai Securities research report, from 2021 to 2023, 5.72 million units of affordable rental housing were built and raised nationwide, completing 65.7% of the '14th Five-Year Plan' target for affordable rental housing. In August 2023, the 'Guiding Opinions on Planning and Building Affordable Housing' (Document No. 14) was issued, and the construction of affordable housing began to advance in parallel through 'sale + rental.'

　　Data shows that from January to June 2024, 1.128 million units of affordable housing were built and raised nationwide (including both sale-type and rent-type), completing 66.2% of the annual plan of 1.704 million units (rooms), with an investment of 118.3 billion yuan. 'It is expected that sale-type affordable housing will become an important increment in affordable housing supply. The 40 cities plan to raise nearly 140,000 units of sale-type affordable housing in 2024,' the report said.

　　Since the '517 New Policy,' with the support of central policies, local governments have frequently issued documents encouraging stockpiling. Cities such as Yinchuan, Hefei, and Tai'an have all issued documents on acquiring existing housing for use as affordable housing, and more and more cities are responding to the policy.

　　However, judging from the actual scale of implementation, the acquisition of existing housing by state-owned capital for use as affordable housing still needs to accelerate.

　　On August 16, Wuhan's first project using affordable housing relending to acquire existing commercial housing for use as affordable housing officially landed. Wuhan Anjia Affordable Housing Co., Ltd. acquired the China Merchants Yuyue project and the Airport Center Phase III project under China Merchants Shekou, with an acquisition area of more than 20,000 square meters, expected to be converted into more than 500 units of affordable rental housing.

　　Zhuhai also recently disclosed information on the acquisition of existing commercial housing. Zhuhai Huafa Industrial Co., Ltd. announced that it plans to conduct transactions for existing commercial housing and supporting parking spaces with its controlling shareholder Zhuhai Huafa Group Co., Ltd. or its subsidiaries, with a total transaction amount of no more than 12 billion yuan. The acquired existing commercial housing will be used to increase the supply of affordable housing, talent housing, and commercial rental housing.

　　In July this year, 154 residential units in Fuzhou were publicly listed for transfer as a package. Fuzhou Anzhu Development Co., Ltd. ultimately acquired 154 residential units, including those in Luling Garden, at a base price of 273 million yuan, with an average unit price of about 20,000 yuan per square meter. Fuzhou Anzhu Development Co., Ltd. is a Fuzhou state-owned enterprise mainly undertaking the task of acquiring and stockpiling existing housing in Fuzhou and converting it into affordable rental housing.

　　Compared with the planned scale, the reason state-owned capital stockpiling has been implemented relatively slowly is that how to balance capital is a major pain point.

　　Huatai Securities stated that affordable housing has a livelihood attribute and is mainly intended to solve housing difficulties for eligible new citizens, young people, and other groups. Therefore, rents for rent-type affordable housing should be lower than market rents for the same location and quality, and there are limits on annual rent increases; the operation of sale-type affordable housing is based on the principle of breaking even with modest profits, priced at 'land cost + construction and installation cost + moderate reasonable profit,' and many places set sale prices at about 50% of commercial housing in the same area.

　　'The 'basic security' attribute of affordable housing determines that acquisition prices cannot be too high. On the one hand, low-cost funding sources are needed; on the other hand, it depends on the price game between the acquiring and selling parties,' Huatai Securities said. Taking rental allocation as an example, the rent-to-sale ratio in key cities is generally low at present. Without subsidies, it is still difficult for post-acquisition operating income to cover costs, affecting the expansion of stockpiling.

　　In addition to capital balance, stockpiling also needs to consider the mismatch between supply and demand. For example, high-tier cities have large demand for affordable housing, but the pressure to destock commercial housing is relatively small, the rent-to-sale ratio is low, and the motivation to repurchase existing housing is weaker than in high-inventory cities. In terms of location, existing commercial housing that is difficult to destock may itself have problems such as poor transportation conditions and lacking supporting facilities, while the supply of residential and commercial-office properties in core areas that meet acquisition requirements is limited. In terms of project qualifications, existing housing projects that urgently need to recover funds and have higher enthusiasm for participating in stockpiling may have complex mortgage and creditor rights relationships, making it difficult to meet acquisition requirements.

　　To solve the above difficulties, local governments are also exploring. For example, Tai'an's current acquisition of existing housing follows the working approach of 'government-led, market-oriented operation.' It first fully identified two baselines: the demand for affordable housing and the quantity of completed existing commercial housing, clarified acquisition arrangements, acquisition entities, and development enterprises, and scientifically and reasonably formulated management measures.

　　Subsequently, the city will be demand-oriented and sustainable development-oriented, adhere to walking on two legs of 'marketization + affordable housing' after repurchase, innovatively formulate operating and management mechanisms for acquired existing housing, make good use of financial support policies, achieve capital balance and project sustainability, and ensure the healthy and orderly development of the real estate market.