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

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, issued a notice stating that starting from March 16, 2026, the minimum down payment ratio for commercial housing (including “commercial-residential mixed-use housing”) 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 their operational status, customer risk profile, and other factors. This is the first adjustment to Shanghai’s commercial property mortgage policy in over a decade, and other cities are expected to follow suit.

In January of this year, the People’s Bank of China and the China Financial Supervision and Administration issued a notice titled “On Adjusting the Minimum Down Payment Ratio for Commercial Housing Loans,” which stated that “the minimum down payment ratio for commercial housing (including ‘commercial-residential mixed-use housing’) shall be no less than 30%,” and pointed out that “according to the principle of city-specific policies, based on a unified national minimum down payment ratio, local authorities can independently determine the lower limit of the minimum down payment ratio for their respective cities.”

“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 noted that the effects of this reduction are quite tangible. For example, for a commercial property valued 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 stated 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 in the short term, inquiries for commercial and office projects in core Shanghai areas will see month-on-month growth.

Zhang Wenjing, General Manager of Shanghai Data at the China Index Academy, 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 a lack of market confidence, shrinking transaction volumes, and a continuous rise in inventory. Lowering the down payment ratio from the previously common 50% or higher to no less than 30% aims to reduce entry barriers, activate potential demand, help property developers accelerate the disposal of commercial properties, and ease inventory pressure.

Zhang Bo, President of the 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 their 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 followed the Shanghai Pudong market, also said that the reduction in the commercial and office down payment ratio will mainly boost the sales activity of hotel-style apartments. “Currently, commercial properties like shops are relatively difficult to sell, but well-located hotel-style apartments can achieve rental yields of 3% or higher, making them quite attractive.” Li Hang cited a project in Zhangjiang, Pudong, where the units are priced between two and three million yuan, with monthly rents maintained at 8,500 to 9,000 yuan. Under the new policy, the down payment required from buyers is reduced by about 500,000 to 600,000 yuan, and with no purchase restrictions, this makes the property 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 noted 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 and is unlikely to replicate the past speculative boom in “near-residential” properties.

“The policy’s goal may be to improve liquidity in 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 acquisition or renovation, for developing new consumption and business formats. Especially after this round of adjustments in industrial and commercial sectors, there will be new market demands for innovative commercial and office projects.

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