China Construction Bank to Finance Housing Leasing

Image Source : China Visual

BEIJING, November 9 (TMTPOST) — China Construction Bank (CCB) has set up a 30 billion yuan ($4.14 billion) fund to finance rental housing amid China's efforts to develop its rental housing market, liquidize existing assets of real estate companies and defuse financial risks in the housing sector, according to its announcement on Tuesday.

The fund has been mainly used to carry out more than 20 projects, with their total assets of over 10 billion yuan ($1.38 billion), according to CCB. As one of China's largest state-owned commercial lender by assets, CCB contributed 29.99 billion yuan ($4.13 billion) to the fund while a wholly-owned subsidiary CCB Trust contributed 1 million yuan ($138,105).

Setting up the fund will deepen the advancement of CCB's house rental strategy to invest in existing assets of real estate developers through market-oriented and professional operations, and strengthen coordination with all parties concerned to increase the supply of long-term and affordable rental homes under a market-based approach.

On the same day, CCB also announced establishing a housing leasing private fund management company and signed memorandums of understanding on the cooperative establishment of sub-funds with market entities in a few cities, such as Beijing and Chongqing municipalities, Nanjing, Jiangsu province, and Guangzhou, Guangdong province.

Comprehensive services such as lending, operations management, and initial public offerings of publicly offered real estate investment trusts will be provided by CCB. While local governments in these cities will give support to the sub-funds by recommending real estate projects and integrating demand for home rentals.

The bank will leverage more social capital to participate in real estate projects, increase long-term capital investment in rental housing, help liquidize remnant assets in the housing sector to reduce inventories and lower debt-to-asset ratios, and explore a new pattern of real estate development that focuses on both home purchases and leading, according to Tian Guoli, chairman of CCB.