BEIJING, Dec 2 (Reuters) – China’s average home rental prices in 40 major cities fell to their lowest last month in nearly two years, according to a private survey published late on Tuesday, in a sign of deepening weakness in the market.
Average home rental prices in November stood at 34.71 yuan ($5.30) per square metre,down from 42.65 yuan in October, according to data from Zhuge House Hunter.
That’s the lowest since January 2019, the Chinese property data provider said.
Rents in Beijing in November slumped 7.61% from a year earlier, extending October’s 3.4% drop, while the southern boomtown of Guangzhou saw a 1.05% decline, its first since January.
Home rents in major cities have fallen this year with businesses hit hard by COVID-19, leading to wage cuts and lay-offs of new graduates and white-collar workers.
The decline has also hammered big home rental firms such as New York-listed Phoenix Tree Holdings Ltd, known as Danke, which has broken lease contracts and defaulted on payments.
Rents in so-called first-tier cities fell following defaults on payments by Danke, Yuan Chengjian, vice president of Zhuge House Hunter, told Reuters.
Danke officials were not immediately available for comment.
Danke is facing a backlash from tenants, landlords and contractors in China’s biggest cities including Beijing and Shanghai, according to state media reports.
Danke has more than 110,000 tenants and around 40,000 landlords in Beijing under its belt, state-run China Youth Daily reported.
Under Danke’s business model, tenants are encouraged to take one-year loans from Danke’s partner bank WeBank to pay their rents. Tenants then repay their loans in monthly instalments.
Meanwhile, WeBank hands over the entire proceeds of the loans to Danke, which however pays its landlords monthly, in most cases.
($1 = 6.5540 Chinese yuan renminbi)
(Reporting by Liangping Gao and Ryan Woo; Editing by Raju Gopalakrishnan)