To deal with China's oversupply of commercial properties, the government is now relaxing its policies to allow some of these buildings to be converted to residential leasing units starting this month, the South China Morning Post reported.

In May, an estimated 34.4 million square meters of offices for rent in China were empty, up 17 percent from May 2015. In the same period, the number of commercial buildings also increased by 24 percent to 152.2 million square meters.

Like Us on Facebook

This situation has pushed the government to allow property developers to convert commercial leases into residential ones.

However, some analysts are skeptical about the move. David Hong, China Real Estate Information Corp. head of research, said "the supply of new homes is very sufficient in most cities, so I don't see that home rental demand will see a big increase that could help digest the commercial property stock."

The initiative is the government's attempt to not only reduce the abundant supply of commercial spaces but also to cater to the growing demand of new immigrants who are unable to pay high home prices.

However, experts have criticized the government for failing to lay out the specifics of the new policy especially to land owners. The issue of the cost of the possible renovation, potential returns for landlords to receive, and how to pay back the land difference to the government have not also been addressed.

"If no departments take responsibility the new policy will hardly take effect," Zhang Hongwei, Tospur Real Estate Consulting research director, said.

James Macdonald, the head of Savills China Research, suggested that landlords should be presented with options for any changes given that top-up charges are paid and housing codes are adhered to.

Tagsreal estate, china, property development