Shanghai reduces the down payment ratio for commercial properties; other cities are expected to follow suit.

Source: Economic Information Daily Author: Liang Qian, Ye Jian

On March 16, the Shanghai Branch of the People’s Bank of China, in conjunction with the Shanghai Regulatory Bureau of the China Financial Supervision and Administration Bureau, issued a notice stating that starting from March 16, 2026, the minimum down payment ratio for commercial housing (including “mixed-use residential and commercial” properties) in Shanghai will be adjusted to no less than 30%. Financial institutions are required to determine the specific down payment ratio for each loan reasonably based on operational status, customer risk, and other factors. This is the first adjustment to Shanghai’s commercial property mortgage policy in over ten years, and other cities are expected to follow suit.

In January this year, the People’s Bank of China and the China Financial Supervision and Administration Bureau issued a notice on adjusting the minimum down payment ratio for commercial housing, stating that “the minimum down payment ratio for commercial housing (including ‘mixed-use residential and commercial’ properties) will be adjusted to no less than 30%,” and emphasizing that “according to the principle of city-specific policies, based on a unified national minimum down payment ratio, local governments can independently determine the lower limit of the minimum down payment ratio within their jurisdictions.”

“The new policy lowers the entry barriers for investment and operation, with the core goal of revitalizing existing commercial and office assets,” said Yan Yuejin, Deputy Director of the Shanghai E-House Real Estate Research Institute. He pointed out that the effects of this adjustment are quite evident. For example, for a commercial property priced at 5 million yuan, before the policy change, buyers needed to pay 2.5 million yuan as a down payment; after the adjustment, the down payment drops to 1.5 million yuan, directly reducing cash flow pressure by 1 million yuan.

Yan Yuejin noted that this change will effectively release demand from investors previously limited by capital thresholds. Coupled with the current warming of second-hand residential transactions and the resulting capital spillover effects, it is expected that consultation volume for commercial office projects in core areas of Shanghai will see month-on-month growth in the short term.

Zhang Wenjing, General Manager of Data at China Index Academy Shanghai, pointed out that over the past few years, the average rent and occupancy rates for commercial and office properties in Shanghai have declined to varying degrees, leading directly to reduced market confidence and shrinking transaction volumes, with commercial and office property inventories continuing to rise. Lowering the down payment ratio from the previously common 50% or higher to no less than 30% aims to lower entry barriers, activate potential demand, help property developers accelerate the disposal of commercial properties, and ease inventory pressure.

Zhang Bo, President of 58 Anjuke Research Institute, believes that the new policy will work in tandem with Shanghai’s efforts to revitalize non-residential stock and support the renewal of office buildings. It will make it easier for small and medium investors and professional leasing operators to enter the commercial-to-rent market, and also reduce the capital pressure on property developers converting self-held commercial properties into long-term rental apartments. Supporting the transformation of commercial properties into long-term rentals, hotel-style apartments, and other formats aligns with the growing demand for residential leasing.

Li Hang, a real estate professional who has long focused on the Pudong market in Shanghai, also said that the reduction in the commercial and office down payment ratio will mainly boost the sales vitality of hotel-style apartments. “Currently, the clearance rate for commercial shops is relatively low, but well-located hotel-style apartments can achieve rental yields of 3% or higher, making them quite attractive.” Li Hang cited a commercial and office project in Zhangjiang, Pudong, where prices range from a couple of million to three million yuan depending on the unit type, with monthly rents maintained between 8,500 and 9,000 yuan. Under the new policy, the down payment required from buyers is reduced by about 500,000 to 600,000 yuan compared to before, and with no purchase restrictions, it is highly attractive to nearby office workers and investors.

However, industry insiders generally believe that while this policy adjustment can stimulate market activity, it will not lead to a comprehensive reversal in the commercial and office market. Yan Yuejin stated that under the current new market conditions—such as slightly high office vacancy rates, rent pressures, and relaxed residential purchase restrictions—the policy’s impact will show significant structural differentiation, making it difficult to replicate past speculative booms in “quasi-residential” properties.

“The policy’s goal may be to enhance the liquidity of commercial and office properties, activating their functions as ‘industrial carriers’ or ‘retail carriers’,” Yan Yuejin said. Lower leverage can direct some properties toward institutions or individuals with the capacity for purchase or renovation and operation, fostering new consumption and business formats. Especially after the recent adjustments in industrial and commercial economies, there will be new market demands for innovative commercial and office projects.

Zhang Bo predicts that first-tier cities like Beijing are likely to follow suit. He believes that, given the current context of a stock-based real estate market, activating existing assets in the commercial and office sector has become an important policy direction. Other cities will not only adjust the down payment ratios based on their market conditions and regulatory goals but may also introduce more targeted policies to achieve multiple objectives such as controlling new supply, reducing inventory, and optimizing supply.

(Edited by Wen Jing)