Changes in Beijing’s Rental Market

Rents have risen in Beijing over the last year.

A couple of weeks ago I had dinner with a friend of a friend who runs six Century 21 real estate brokerages in Beijing. I asked him about rentals in the high-end residential market. Historically Chinese did not rent in the more expensive residential complexes–why waste the money on a pricey rental when you should save and buy your own place?

But according to my dinner companion, and my own experience, that is changing. 12-18 months ago the majority of his business came from renting to foreigners. Now the bulk of his clients are mainland Chinese, paying higher rents. He is happy but surprised and does not have a good explanation (policy paralysis? too much easy money? people seeing a top?) for the shift. He is also still selectively buying luxury properties in Beijing, so he certainly does not believe that the market has topped.

Whatever the reasons, at least for now it is good news for brokers like him and for landlords of higher end properties.

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6 thoughts on “Changes in Beijing’s Rental Market

  1. When I lived in Shenzhen, it seemed that apartment rentals were generally lower than mortgage payments. One apartment we rented, for instance, we paid 6000 per month. It was three bedrooms, 2 bathrooms, 120 sq meters, brand new furnishings and interior. One of the realtors let it slip to us that the current mortgage was about 10,000 per month. The apartment sold in the neighborhood of 2 million. It seemed that the real income from a property was through its appreciation and resale. In our same garden an American man had purchased a similar apartment and hoped to rent it out as an income property. The rent he wanted to charge was slightly higher than his mortgage and amortized improvements and furniture. At 12,000 a month, it was several thousand higher than any other equivalent rental in our garden.

    Is this the case in Beijing? Is rent lower than mortgage payments? Pride of ownership aside, a renter could live much better than a buyer if this is the case.

  2. When I lived in Shenzhen, it seemed that apartment rentals were generally lower than mortgage payments. One apartment we rented, for instance, we paid 6000 per month. It was three bedrooms, 2 bathrooms, 120 sq meters, brand new furnishings and interior. One of the realtors let it slip to us that the current mortgage was about 10,000 per month. The apartment sold in the neighborhood of 2 million. It seemed that the real income from a property was through its appreciation and resale. In our same garden an American man had purchased a similar apartment and hoped to rent it out as an income property. The rent he wanted to charge was slightly higher than his mortgage and amortized improvements and furniture. At 12,000 a month, it was several thousand higher than any other equivalent rental in our garden.

    Is this the case in Beijing? Is rent lower than mortgage payments? Pride of ownership aside, a renter could live much better than a buyer if this is the case.

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  4. Bill–It is inevitable. Prices are just too high. Societal norms surrounding home ownership and marriage are going to slowly break down, first and especially in places like Beijing and Shanghai. That said it is more interesting that this is not mass market but high-end. Maybe this is also a sign that people are starting to see the peak and don’t have as much belief that buying is a good bet anymore.

  5. Bill–It is inevitable. Prices are just too high. Societal norms surrounding home ownership and marriage are going to slowly break down, first and especially in places like Beijing and Shanghai. That said it is more interesting that this is not mass market but high-end. Maybe this is also a sign that people are starting to see the peak and don’t have as much belief that buying is a good bet anymore.

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