Speaker
Description
Against the backdrop of tight urban spatial resources, urban governments in China are actively implementing urban renewal strategies by transforming idle commercial and office spaces as well as urban villages into rental housing. This is conducive to revitalizing the utilization of existing spatial resources and promoting the balance between employment and residence. Globally, the rental housing market shows strong profit - making potential, attracting in - depth participation from investment institutions and banks, thus forming a new trend of the financialization of rental housing. The Chinese government not only strongly supports the development of rental housing to ease residents' housing difficulties but also explicitly encourages the active participation of financial institutions. This paper explores the intervention process and financialization characteristics of Chinese financial institutions in renewed rental housing projects through the analysis of two micro - cases of the light - asset model (operating companies) and heavy - asset model (equity investment) of financial institutions' participation in renewed rental housing.
The contributions of this paper are reflected in two aspects: (1) It elaborately summarizes the financial innovations of financial institutions' intervention in renewed rental housing projects. Firstly, by establishing different specialized institutions (operating companies and equity investment institutions), they intervene in the renovation process of "light - asset" and "heavy - asset" rental housing respectively, and support this process through financial innovations in aspects such as equity acquisition, special loans, and REITs. Secondly, an asset operation process of "investment, financing, management, and exit" has been formed, which is significantly different from the previous short - cycle real estate projects of "building houses - selling for profit". Thirdly, the "second curve" is developed. When the income from rental housing is meager, banks obtain additional income by marketing their other financial products (to the government, enterprises, and tenants), which is an interesting new trend in the Chinese banking industry. (2) By placing the theory of "the financialization of rental housing" in the unique institutional and market environment of China and comparing it with the previous "land financialization" model centered on land transactions, it is found that: Firstly, the goal of financialization has undergone a transformation. It now emphasizes the strategic focus on addressing residents' housing issues with national welfare, rather than merely concentrating on spatial expansion and capital accumulation. Secondly, the realization of the financialization process depends on the good cooperation among the government, property owners, and financial institutions, and this cooperative relationship needs to run through the entire process of "investment, financing, management, and exit". This research enriches the theory of the financialization of rental housing and is of great significance for promoting the healthy and sustainable development of the rental housing market.
References
Fields, D., & Uffer, S. (2016). The financialisation of rental housing: A comparative analysis of New York City and Berlin. Urban Studies, 53(7), 1486-1502.
Aalbers, M., Van Loon, J., & Fernandez, R. (2017). The Financialization of A Social Housing Provider. International Journal of Urban & Regional Research, 41(4), 572-587.
Zhang, M., Luo, Z., Qiao, S., et al. (2023). Financialization, platform economy and urban rental housing: Evidence from Chengdu, China. Applied Geography, 156, 102993.
Li, C., Zhu, J., & He, S. (2024). Regulating in - between (in) formality: institutionalising the private rental market in China’s urban villages. Housing Studies, 1 - 23.
Xu, X., & Akita, N. (2021). Demolition/reconstruction, and comprehensive renovation? Reflections on the renewal of urban villages in North China A case study of a Beijing urban village. International Review for Spatial Planning and Sustainable Development, 9(2), 62-75.
Gustafsson, J. (2024). Renovations as an investment strategy: Circumscribing the right to housing in Sweden. Housing Studies, 39(6), 1555-1576.
| Keywords | Financialization; Urban Renewal; Rental Housing; Investment and Financing; Financial Institutions |
|---|---|
| Best Congress Paper Award | Yes |
