Core Insights - A new dominant force is emerging in China's rental housing investment sector, with funds and insurance capital entering the long-term rental apartment market at an unprecedented pace, reshaping the investment landscape [2][3]. Investment Trends - The influx of funds into the long-term rental market is driven by the asset's inherent characteristics of low volatility, long cycles, and predictable cash flows, aligning well with insurance capital's demand for safety and stability [2][10]. - The successful implementation of typical projects has validated the feasibility of the "investment-management-exit" model, highlighting the value of government-enterprise collaboration and professional operations [2][10]. Market Dynamics - In the first half of 2025, seven disclosed large-scale transactions in housing rentals were recorded, with four in Shanghai, two in Beijing, and one in Xiamen, indicating a shift from banks and foreign institutions to funds and insurance as the main players [3][10]. - Insurance capital is rapidly emerging as a "core buyer" in the rental housing market, with notable transactions such as AIA's acquisition of the Yumi community in Shanghai for 980 million [3][6]. Financial Performance - Long-term rental apartments exhibit significant yield advantages, with capitalization rates in first-tier cities stable at 4.6%-5.8% and second-tier cities at 5.6%-6.8%, which are notably lower than other commercial assets like office buildings and shopping centers [10][11]. - REITs related to affordable housing have maintained over 18% in returns, leading the market, with cash distribution rates for issued REITs in 2024 projected to be in the 3-4% range, showcasing significant excess return characteristics [11][14]. Policy Support - Local governments are enhancing the risk resistance of rental housing projects through tax reductions, financial subsidies, and low-interest loans, effectively lowering development and operational costs [14][15]. - Policies are creating a closed-loop advantage of "eased entry, smooth exit, local empowerment, and controllable risks," significantly reducing investment barriers for insurance capital [15][16]. Future Outlook - The current downturn in the real estate sector presents a favorable opportunity for insurance capital to increase investments, supporting the real economy while awaiting appreciation and long-term returns [16][18]. - As the supply peak for rental housing approaches, insurance capital is expected to participate more deeply and broadly, facilitating the transition from "light asset operation" to "combined light and heavy asset expansion," and promoting the securitization of rental housing assets [18].