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

Targeting young professionals means landlords can't charge high rents. Developers, such as Vanke and Longfor, are mostly leasing or buying under-utilized assets such as hotels, offices and warehouses and redeveloping them into rental units as the returns are much higher than if they bought land and built a new development.

Vanke said in this model, gross profit margin for their rental apartments is in the 20-30 percent range, up to 10 percentage points higher than its overall property development business in 2016.

Still, the industry is in the early ramp-up investment stages in China and the profits are yet to flow into accounts in a meaningful way.

And there may be plenty more rental development to come. Realtor Lianjia Real Estate forecasts that the sector will almost triple to $420.5 billion in annual rental payments by 2025.