Real Estate China Property Management – Urban Renovation: A new potential Rmb100bn market

China's State Council announced it will renovate 39,000 urban residential communities in 2020 in multi-year project to renovate 42m households. COVID-19 could accelerate the need for higher sanitation, sterilisation & security values.

04 May 2020

China aims to double the urban renovation in 2020 vs. 2019

Source: Ministry of Housing and Urban-Rural Development

This bar graph illustrates how many households and communities are included in urban renovation development in 2018, 2019, and 2020E.

We expect re-rating to continue

Given the sharp rally in the property sector we think the market is appreciating the sector's earnings sustainability and growth outlook, as we previously highlighted, in completion upcycle, public property, and third-party contract.

Urban renovation: A new market that may be worth Rmb100bn per annum

To boost consumption and improve living conditions, the State Council announced that it will renovate 39,000 aging urban residential communities in 2020, which will benefit 7m households, doubled from 19,000 communities and 3.5m households in 2019. This is a multi-year project, as the Ministry of Housing has identified 42m households that need to be renovated. Also, the government is promoting the introduction of professional management companies to manage the renovated facilities, as in the case of Beijing.

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