The first apartment purchased via Shanghai's mechanism of acquiring pre-owned homes to guarantee the supply of government-subsidized rental housing completed its transaction on Tuesday, marking a closed loop of home circulation under the pilot program.

Contracts for selling an existing flat and buying a newly built apartment were signed simultaneously on Tuesday afternoon in Shanghai's Jing'an district by a Shanghai resident surnamed Shi, who became the first applicant of the new mechanism, according to the Shanghai Observer.

After selling a 40-square-meter pre-owned apartment situated in the Jing'an district, Shi received 2.2 million yuan ($318,500) to purchase a new three-bedroom apartment in the same district, according to the contracts.

The deal marked the materialization of Shanghai's latest initiative to ensure the supply of government-subsidized rental housing through acquiring pre-owned homes.

During a signing ceremony in early February, Shanghai announced the first batch of such projects, which allowed the local governments of Jing'an district, Xuhui district, and Pudong New Area to pilot the initiative on respective conditions.

In Jing'an's case, the local government looks to acquire privately-owned flats located about three kilometers from subway stations, surrounded by industrial parks, under 70 square meters, and priced below 4 million yuan. Applicants are then allowed to buy any new apartment situated in the district without price limit. Under the municipal government's guidance, Jing'an district is set to further expand the purchase to existing apartments.

The launch of the mechanism is against the backdrop of an insufficient high-quality rental housing supply. About 13,000 units of government-subsidized rental housing are expected to be added during the 15th Five-Year Plan (2026–30) period, according to the Jing'an district.