A unit is seen at a so-called youth apartment by Chinese developer Mofang Apartment in Shenzhen, China April 26, 2017. [Photo/Agencies]

US private equity firm Warburg Pincus is among the foreign investors who have taken note. It has invested $500 million with China's Avic Trust in so-called "white-collar apartment" manager Mofang, which started its business in 2010 and now operates 30,000 rental units across the country.

Another rental apartment platform, Mogoroom, has attracted investment from South Korean venture capital firm KTB Network. Also Greystar Real Estate Partners LLC, the largest apartment manager in the United States, says it is looking for opportunities in major Chinese cities.

Chinese developers China Vanke and Longfor Properties are betting big on the so-called youth apartment market, which is aimed primarily at 20-40 year-olds. Vanke aims to add 150,000 rental units to the market in the coming two years, while Longfor is looking at growing by 15,000 units each year.