To attract the best employees, tech companies have showered their staff with perks like concierge services, massages and gourmet canteens. Companies like Facebook and Google are now tackling a bigger complaint from their workforces – not being able to afford a home in prohibitively expensive Silicon Valley.
In Mountain View, where the median home is priced at $1.6 million and the average one-bedroom apartment rents for $2,800 a month, search giant Google will build 5,000 homes under an agreement brokered with the local government.
Facebook, too, is building 1,500 apartments in Menlo Park. It has agreed to offer 225 of them at below-market rates but the most likely tenants of the full-price units are company employees.
In China cities are trying out housing incentives in the name of talent acquisition too. The local government of Hohhot – the capital city of Inner Mongolia with a population of about 3.1 million – is offering a range of new flats at a deep discount. People who have graduated within the past three years, and who are married and working in the science and technology sectors, have a chance of getting them at half the market price. The caveat: purchasers of homes under the programme won’t be allowed to sell within five years of buying and buyers have to live and work in Hohhot to get the discount.
While the local government did not say how many flats it was planning to build or when they would become available, officials say that the units will go on sale soon. At the same time, the city is rolling out a rental housing programme for university graduates which would waive rents for the first two years in the new homes.
The new initiatives reflect a growing trend among cities to offer financial incentives in a bid to attract the best talent, especially young graduates, who tend to look for work in more developed locations. “More and more cities are entering the battle for talent, which is in line with the Chinese economy’s critical transition from traditional to innovation-led growth,” Song Ding, vice director of the China Urban Economy Expert Committee, told the Global Times.
More than 60 cities – including Xi’an, Nanjing and Wuhan – have introduced ‘talent settlement’ policies to attract graduates, according to data from Centaline Property Research Centre. Ningbo in Zhejiang province is another city offering house purchase rebates of between Rmb150,000 and Rmb600,000 ($89,106) for academic experts, researchers and scientists, says National Business Daily.
Some of these schemes have been cited more as subterfuge for efforts to prop up local housing markets –especially in cities where the central government’s cooling measures have had most impact.
Hohhot’s housing market has been in a slump, for instance. In 2018, total investment in real estate development was down 27% from a year earlier to Rmb17.4 billion.Residential sales have been slowing too: just 431 and 116 units were sold respectively in January and February. For comparison, 3,181 units were purchased last August. In March, Hohhot had 197 transactions, compared with 2,619 units the prior year, a significant drop.
“Hohhot’s incentive programme is actually very narrow and there are very few buyers who can qualify. However, for college students who have graduated within the last three years, the policy encourages them to buy a house. It reveals the real intention of the local government for the housing market,” reckons Economic Daily.
Experts also say that if the city’s goal is to boost its appeal to a younger, more productive workforce, simply offering cheap housing is not going to solve the problem. “To attract talent, there needs to be sustainable job opportunities for them. For Hohhot, there aren’t many large enterprises apart from those in the dairy, tobacco, photovoltaic and animal feed industries. So the introduction of competitive sectors is far more important than bringing in talent. While all the cities are rushing to court the best talent, what they don’t understand is that giving them opportunities and space for growth is far more important,” Yang Fei, an economic professor, wrote.
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