BRT Mode for Low-Rent Housing

During the period of the Twelfth Five-Year Plan, Chinese government is planning to build 36 million apartments with the aim of providing public housing and affordable housing. As there is a shortage of fiscal budget, Build-Rent-Transfer (BRT) procurement strategy is proposed to tap private capital for the housing program. This paper first analyzes relationships among a concession period, housing rents and government's subsidies through cash flow analyses. Then it proposes a formula to adjust government's subsidies to mitigate risk exposure of project sponsors. The findings of this paper show that BRT can tap private capital if the government provides reasonable subsidies.