7 days ago
Shanghai plans housing upgrade drive in a boost for consumption, investment
Agencies
Shanghai, China's commercial centre, will launch a wide-ranging initiative to redevelop urban villages next year, marking one of its most ambitious citywide renewal campaigns yet.
The project, announced at a late July meeting of the city's legislative body as part of a three-year plan, signals a broader and more intensive push to overhaul urban villages than previous efforts.
As the nation's financial hub and most populous city, Shanghai has the second-highest housing prices in mainland China after Shenzhen, making its real estate market an indicator of national trends.
Though light on specific details, the new campaign aligns with China's shift from large-scale urban expansion to enhancing existing infrastructure, as highlighted in the Central Urban Work Conference last month.
Alongside the urban village initiative, launching in 2026, Shanghai aims to renovate small, thin-walled housing by 2027 and continue upgrading old residential neighbourhoods, said Wang Zhen, director of the Municipal Housing and Urban-Rural Construction Management Committee, at the July 30 meeting outlining the action plan for 2026-2028.
From 2023 to June 2025, the city renovated 39.1 million square metres of old neighbourhoods and identified 44 urban villages to be redeveloped, he was quoted as saying in an official village renewal typically involves demolishing outdated structures and redeveloping them into modern residential and public facilities.
It is viewed as a potential catalyst for the world's second-largest economy, as it struggles to find new growth drivers amid a broader slowdown.
In May, Qin Haixiang, vice-minister of Housing and Urban-Rural Development, said the project, along with other upgrades, 'can effectively drive investment and consumption, boosting domestic demand'.
The redevelopment of urban villages and dilapidated housing is seen as a potential new model for China's struggling real estate sector, which has been in decline since mid-2021.
Last week, the capital city Beijing further eased housing sale restrictions, allowing families meeting specific criteria to buy unlimited properties outside the fifth ring road.
The policy shift is widely seen as a signal to relax regulations in other megacities like Shanghai and Shenzhen, where restrictions on residency, social security contributions and property ownership persist.
Yao Yang, a prominent Chinese economist, has proposed a bold state-backed 'housing reserve' system to tackle China's ongoing real estate crisis.
'China has the China Grain Reserves Corporation and it could establish a similar 'China Housing Reserves' system, where the government acquires properties as affordable housing, forming a long-term financial mechanism,' he suggested in an interview with Caijing magazine published last week.
The government should start by acquiring foreclosed properties – estimated at over 1 million units in 2025 – that remain unsold despite being priced at half their market value, he said. Sluggish sales have led to a large number of such properties in bank inventories, dragging down overall market prices.
Swift action on this front would stabilise society and housing prices, and should be led by the central government, not local authorities, he urged.
