Hefei's First Project of Acquiring Existing Housing Stock for Conversion into Rental Housing for Security Purposes Lands, with Multiple Regions Exploring New Paths to Revitalize Inventory

Longfor's self-held housing units in a project in Hefei have been successfully "acquired and stored."

According to information released by Hefei Anju Group, it has recently completed the property rights transfer and fund payment for the Shushan Xichen Original project. This is the first case in Hefei City where existing commercial housing units have been acquired for use as affordable rental housing since Anju Group issued the "Notice on Soliciting Acquisition of Completed Existing Commercial Housing Units for Use as Affordable Housing" in September 2024.

The Shushan Xichen Original project, developed by Longfor Properties, was delivered in 2021. Located at the northwest corner of the intersection of Baoyue Road and Duxianqiao Road in Shushan District, Hefei City, and adjacent to the Hefei High-Tech Industrial Development Zone, it will primarily serve talents in technology R&D, e-commerce, foreign trade logistics, and other fields within the zone. The project covers a total land area of approximately 61,000 m², encompassing various property types such as small high-rise buildings and low-density multi-story buildings. The 1# and 6# buildings acquired this time are self-held rental housing units of the developer, totaling 138 units, mainly consisting of small and medium-sized apartments.

According to the public announcement on the official website of Shushan District Government, Hefei City, in January this year, the project was developed by Hefei Xiayi Real Estate Co., Ltd., with a total of two rental housing buildings.

Information from Tianyancha shows that Hefei Longhu Jinwan Real Estate Development Co., Ltd. and Anhui Lifeng Group Co., Ltd. hold 70% and 30% equity in Xiayi Real Estate Co., Ltd., respectively.

It is understood that the successful implementation of this business is the first affordable housing reloan project within the system of the Hefei Branch of Shanghai Pudong Development Bank. Hefei Anju Group stated that the company will accelerate the renovation and decoration work and plans to put the project into operation in the second half of 2025 (H2).

In contrast to Hefei Anju Group's "acquisition and storage" of the Shushan Xichen Original project through affordable housing reloans, Zhejiang Province will acquire existing commercial housing units through special bonds.

According to the "Information Disclosure Document for the 2025 Zhejiang Provincial Government Special Bonds (Issues 13-20)" issued by the Zhejiang Provincial Department of Finance, the issuance scale of these special bonds is 55.267 billion yuan, of which approximately 1.653 billion yuan is planned to be used for the acquisition of existing commercial housing units.

According to E-House China R&D Institute, a total of eight residential projects in Zhejiang Province have been included in the scope of special bond-funded commercial housing acquisitions, belonging to three different bonds: "25 Zhejiang Bond 23," "25 Zhejiang Bond 25," and "25 Zhejiang Bond 26." In terms of the project locations, among these eight projects, four are in Huzhou, three are in Wenzhou, and one is in Jiaxing.

"Zhejiang Province's promotion of special bond-funded acquisition of existing commercial housing units this time has not been carried out in the provincial capital city of Hangzhou but has been implemented in the three cities of Huzhou, Wenzhou, and Jiaxing, which is largely related to the destocking needs of these cities. "Some third- and fourth-tier cities are facing significant inventory pressure, making destocking relatively difficult. Zhejiang has provided a referenceable path for addressing the destocking issue in third- and fourth-tier cities by acquiring existing homes through special bonds," said Yan Yuejin, Deputy Dean of the E-House China Research and Development Institute.

From a national perspective, analysts from the China Index Academy introduced that since 2024, over 80 cities (districts) nationwide have issued announcements on acquiring existing commercial housing for use as affordable housing. After entering 2025, funds for acquiring existing commercial projects have successively landed in multiple places, including Hefei, Shenyang, and Dalian. Most of the acquired existing homes are used as affordable rental housing. However, the frequency of announcements for acquiring existing commercial housing has decreased YoY.

A researcher from a real estate agency told reporters that the relatively slow progress in local governments' acquisition of existing homes for affordable housing is partly due to factors related to the funding of "acquisition and storage," and partly because local governments also need to consider how to achieve project revenue-expense balance in this process.

"When local governments acquire existing homes for affordable housing, they need to consider not only the social impact it can generate but also assess whether the acquired targets are of sufficient 'quality.' For local governments, they need to ensure the safety of the invested funds, check whether the projects meet corresponding return requirements, and may also evaluate the operational efficiency and returns of the projects invested in over a certain period," said the above-mentioned researcher.

In response, industry insiders pointed out that acquiring existing homes for affordable housing helps address the destocking issue and is also beneficial for promoting people's livelihood security. However, at the same time, it is necessary for local governments to explore diversified approaches and broaden their thinking.

In this regard, Fujian Province and Hunan Province, based on their respective actual situations, have made new attempts in the practice of "acquisition and storage" targeting different groups and markets, which are considered to have provided inspiring and beneficial ideas.

On May 28, the Fujian Provincial Government issued a notice on the "Implementation Plan for Special Actions to Boost Consumption in Fujian Province." Regarding the promotion of housing consumption, Fujian encourages various regions to explore multi-subject acquisition models according to local conditions and supports the acquisition of existing commercial housing for use as college dormitories, community elderly care service facilities, staff dormitories, migrant worker affordable housing, talent housing, and youth apartments.

On May 30, the Hunan Provincial Department of Housing and Urban-Rural Development issued several measures to promote the steady and healthy development of the real estate market. Addressing the housing needs of talents, the "Ten Measures of Hunan" proposed three policy measures. One of them mentioned supporting various regions in acquiring existing commercial housing for use as talent housing, which can be provided free of charge to entrepreneurial college students and young talents for residence within a certain period, or used free of charge as entrepreneurial venues for entrepreneurial college students and young talents.

"Under the policy system that grants urban governments greater autonomy in terms of acquisition entities, prices, and purposes, we believe that local governments can appropriately expand the scope of the target population and their needs to achieve a win-win situation in terms of both economic benefits and social benefits," said Yan Yuejin.