Rents have not risen sharply, why are rental housing REITs targeted by capital?
Data from Tonghuashun shows that as of November 4, the 11 public REITs for rental housing have recorded an average increase of 5.9% so far this year, ranking second in the public REITs market, only after the water conservancy infrastructure sector. Over the same period, the 95 products across the whole market posted an average decline of 7.79%.
In the past three months, the rental housing sector in the public REITs market saw an average rise of 6.99%, topping all sectors; the whole market averaged a 0.73% drop over the same period. Among the 11 rental housing REITs, 8 have risen and 3 have declined year to date, while all of them have posted gains in the past three months.
Sectors including industrial parks, warehousing and logistics have seen relatively large declines this year. Among them, all 20 products in the industrial park sector have dropped so far this year, with a median decline of 26.62% and a 4.29% drop in the past three months.
A securities institution professional engaged in public fund business told the Economic Observer that the strength of the rental housing sector is driven by three factors: first, newly listed products have recorded substantial gains, pushing up the sector average; second, the low interest rate environment has prompted the market to re-evaluate the value of rental housing assets; third, compared with some other types of assets, the operation of rental housing is relatively stable.
From his perspective, rental housing can maintain occupancy rate by adjusting rents, while industrial parks may not be able to solve the rental recruitment problem by cutting prices.
Resilience
Of the 11 public rental housing REITs, 3 are newly issued products in 2026. As of November 4, the AVIC Beijing Changbao Rental Housing REIT established in April this year has accumulated a 27.28% increase year to date, and a 2.43% rise in the past three months; the CICC Hangzhou Anju Ningchao REIT and Guotai Haitong CSCEC Rental Housing REIT listed in October have recorded increases of 24.75% and 9.69% respectively in the past three months.
Excluding these 3 products, the remaining 8 have averaged a 5.01% increase in the past three months. Among them, China Asset Management Beijing Affordable Housing REIT, China Merchants Fund Shekou Rental Housing REIT, CICC Xiamen Anju REIT, and Huatai Suzhou Hengtai Rental Housing REIT rose by 8.81%, 8.67%, 6% and 5.73% respectively.
Some products have rebounded recently and have not yet recovered their year-to-date losses. Hongtu Innovation Shenzhen Anju REIT and China Asset Management Fund CRU Youchao REIT rose by 1.68% and 2.6% respectively in the past three months, but still fell by 4.46% and 5.84% respectively year to date.
CICC Xiamen Anju REIT was listed in August 2022. Its price gradually rebounded after hitting the bottom in February 2024, reached a historical high in October 2025, and then fell back. Since September this year, the product has risen again and turned to slight volatility at the end of October.
As of the midday close on November 6, CICC Xiamen Anju REIT has accumulated an increase of 78.49% since listing, a 1.51% drop in the past year, a 6% rise in the past three months, and a 1.24% decline in the past week. China Asset Management Beijing Affordable Housing REIT, which was listed in the same batch, has accumulated an 88.2% increase since listing, with rises of 6.76%, 9.93% and 0.29% in the past year, the past three months and the past week respectively.
The report from Huafu Securities shows that from October 26 to 30, the CSI REITs Index fell by 1.28%, with the industrial park, warehousing and logistics, and affordable rental housing sectors dropping by 3.96%, 2.34% and 0.89% respectively.
The aforementioned securities institution professional believes that the divergent performance of various sectors is related to the operating conditions of underlying assets and market valuation. The demand for some franchise-type assets is relatively stable, but as the remaining operating life shortens, their valuation will also be affected; the industrial park market has sufficient supply, putting pressure on occupancy rate and rent, which in turn affects valuation; after the slowdown of real estate transactions, rental demand increases, and the relatively stable operating performance of rental housing has obtained higher valuation in the low interest rate environment.
In his view, within the rental housing sector, public rental housing is more resilient than market-oriented rental housing due to its more stable tenants. Public REITs investors pay more attention to cash flow, and the impact of short-term book gains and losses on prices is relatively limited.
In the third quarter, China Merchants Fund Shekou Rental Housing REIT recorded an average monthly rent of 103.89 yuan per square meter, a year-on-year increase of 1.40%; Hongtu Innovation Shenzhen Anju REIT had an average monthly rent of 36.24 yuan per square meter, up 0.86% year on year; Guotai Haitong Chengtou Kuanting Affordable Rental Housing REIT posted an average monthly rent of 130.83 yuan per square meter, down 0.59% year on year. The rent fluctuation range of these products is relatively small.
Cash Flow
The distribution rate of rental housing REITs is not the highest among all sectors. Based on the closing market value on November 4 and the simple annualization of the distributable amount in the third quarter, the median distribution rate of affordable rental housing REITs with corresponding data is about 3.14%, while that of the consumer infrastructure, warehousing and logistics, and industrial park sectors is about 4.51%, 4.84% and 5.73% respectively.
The distributable amount of Hongtu Innovation Shenzhen Anju REIT in the third quarter was about 12.2167 million yuan, with a total fund share of 500 million shares, equivalent to about 0.0244 yuan per share. Calculated at the closing price of 3.3 yuan per share on November 4, the annualized distribution rate is about 2.96%. Estimated by the same method, the distribution rate of Guotai Haitong Chengtou Kuanting Affordable Rental Housing REIT is about 3.46%.
The rental housing sector with a relatively low distribution rate has seen relatively stable growth in distributable amount. Statistics from Shenwan Hongyuan Securities on samples with comparable data in the third quarter show that the income of the affordable housing sector fell by 0.3% year on year, while the distributable amount increased by 5.4% year on year; the distributable amount of the warehousing and logistics and industrial park sectors decreased by 7.3% and 33.1% year on year respectively.
When calculating the distribution rate with market value as the denominator, the lower the fund price, the higher the distribution rate may be. The Shenwan Hongyuan Securities report shows that the price-to-net asset value ratio (P/NAV) of rental housing REITs is generally between 1.13 and 1.39 times, while some industrial park REITs have a P/NAV lower than 1 time.
The occupancy rate and rent collection rate of rental housing projects provide support for cash flow. The Q3 report shows that the four projects of CICC Xiamen Anju REIT hold a total of 7,354 housing units, with a leasable area of about 288,500 square meters. The occupancy rate calculated by building area at the end of September was 98.95%, and the rent collection rate was 100%; the occupancy rate of AVIC Beijing Changbao Rental Housing REIT at the end of the third quarter was 95.66%, and the collection rate was 99.93%.
The aforementioned securities institution professional introduced that the daily distribution of some franchise-type REITs includes principal recovery, so the entire distribution rate cannot be regarded as investment income. The attractiveness of rental housing REITs comes more from the high occupancy rate and the expectation of continuous rent collection.
He divides rental housing assets into two categories: public rental housing and market-oriented rental housing. The rent of public rental housing is lower than the market level, and the demand is relatively sufficient. Taking the underlying asset of a public rental housing REIT in a first-tier city as an example, the number of tenants waiting in line is three times the number of available housing units. After a batch of tenants move out, new tenants can be supplemented quickly.
Market-oriented rental housing has more flexible pricing. When the occupancy rate is lower than expected, promotions such as rent reduction can be used to attract tenants, and some projects also have supporting commercial income.
A person in charge of the underlying asset project of a public rental housing REIT told the Economic Observer that when there are many competing projects in the surrounding area, the occupancy rate and rent of the project will be under pressure. He believes that the rental demand in first- and second-tier cities is relatively sufficient. Projects can reduce rents to increase occupancy rate, and make up for part of the rent loss through value-added service income, leaving relatively large room for operation adjustment.
Rent Collection and Reinvestment
On June 4, the additional issuance shares of CICC Xiamen Anju REIT were listed, raising about 789 million yuan in funds, which were used to purchase Linbian Apartment in Siming District and Renhe Apartment in Huli District, Xiamen, adding 2,689 new housing units and a leasable area of about 89,900 square meters.
The China Securities Regulatory Commission Xiamen Bureau disclosed that the assessed value of the assets purchased this time is 686 million yuan, with a 15% premium for the additional issuance. The original equity holder Xiamen Anju Group recovers funds through asset de-recognition, and will use the recovered funds for the construction of new affordable housing in accordance with regulations.
The original Yuanbo Apartment and Hengqi Apartment of CICC Xiamen Anju REIT were put into operation in November 2020, and the Linbian Apartment and Renhe Apartment purchased through additional issuance were put into operation in September and April 2022 respectively. The four projects are located in different areas of Xiamen, covering two types of housing: affordable rental housing and public rental housing.
In the third quarter of 2026, the average rent of CICC Xiamen Anju REIT rose by 5.5% year on year, of which the two original projects increased by 2.07% and 1.89% respectively. The overall increase in average rent is mainly due to the inclusion of higher-rent assets from the additional issuance in the statistics.
A total of about 213 million fund shares were issued in this additional issuance, with an offering price of 3.697 yuan per share. The newly purchased housing units have increased rental income, and the number of fund shares has also increased accordingly. For secondary market investors, the purchase price of the additional issuance assets, the subsequent occupancy rate and the new distributable amount affect the returns that each fund share can obtain.
The aforementioned securities institution professional said that in the low interest rate environment, institutional funds are looking for relatively stable sources of income, so the operating performance and cash distribution of rental housing REITs have attracted attention. Original equity holders can recover construction funds through issuance and additional issuance, and invest the funds in new projects.
The additional issuance documents of China Asset Management Beijing Affordable Housing REIT stipulate that the original equity holder plans to use no less than 85% of the net recovered funds for the public rental housing project at the Dongheyuan plot, Beigong Town, Fengtai District, the No.4 plot project at Lijiazhuang, Nanyuan, Fengtai District, or other approved rental housing projects.
As of the end of the third quarter, the leasable area of China Asset Management Beijing Affordable Housing REIT is about 241,500 square meters, with an occupancy rate of 96.36%, 0.84 percentage points higher than the same period in 2025; the rent collection rate is 96.47%. Its income distribution stipulates that the annual cash distribution amount shall not be less than 90% of the distributable amount.
This article is from the WeChat Official Account "Economic Observer", written by Tian Guobao, and published with authorization by 36Kr.