Any expat renting an apartment in one of China’s big cities faces this burdensome question: Am I stupid?

Despite the government’s efforts to cool the real estate market, property still is red hot in many parts of China including the capital. Anyone living in Beijing or somewhere else urban without a piece of the property pie arguably is losing out big.

Last fall, the International Herald Tribune (IHT) reported:

Elena Lou’s PDA rings again. It is another rich client with a home to unload. Three years ago the client plunked down $320,000 on a choice villa near Beijing’s Capital Airport and spent $100,000 sprucing it up. Now someone is offering him $820,000 - except the deposit deadline just passed and the prospective buyer has yet to ante up. Her client’s reaction?

‘He’s raising his price. Now he wants 7.8 million yuan,’ more than $1 million, said Lou, head of the local boutique real estate agency Elite Realty. ‘Second-hand interest is that hot right now. Sellers are getting hundreds of thousands more than their original asking prices.’

At that time, IHT noted that new and resold apartments were going for 12 to 15 percent more than they were the previous year.

But some countries have undergone economic recession right after the Olympics. Are expats living in China – at least for now – actually smarter to continue renting and wait for a dip in prices until after the Olympics?

That’s open for debate. But according to Feng Lun, of Beijing Vantone Real Estate, speaking at a forum on real estate at Asia Society’s 18th Asian Corporate Conference, real estate will continue to be a good investment after the Olympics.

China’s GDP has been growing at more than 10% annually since well before the IOC awarded the games to Beijing. Because of this solid growth track record, Mr. Feng suggested dispensing with any fears of a post-Games residential property slump. Here are a few other things Mr. Feng said to consider:

• The market situation in Beijing is more reflective of the 30 years of policies towards opening up, not just the build up to 17 days of Games. In addition, just 5 percent of buyers in Beijing recently report the Olympics as having an effect on their purchase decisions. After all, people have to live somewhere, football matches not withstanding.
• Beijing represents just 3.7 percent of China’s overall GDP. While some may look to Beijing’s market as a bellwether for the rest of the country, cities around China are in vastly disparate economic situations. Thus, if a slump did occur, it would likely be localized and minimal.
• Some countries have undergone economic recession after hosting the Olympics. But the Olympics haven’t in recent history been awarded to a city in Beijing’s current stage of development, so any comparisons to other host cities post-games problems can’t truly be made.

Mr. Feng added that hotels and events centers will likely face some oversupply issues, as many venues will convert into “activity centers” once the Games end.

But residential property is here to stay, and grow. One-point-three billion people wouldn’t have it otherwise.

This is the seventh and final story in a series of articles on the Asia Society’s 18th Asian Corporate Conference, which ended a week ago in Tianjin, China.

The Asia Society, founded in 1956, is the leading global organization working to strengthen relationships and promote understanding among the people, leaders, and institutions of Asia and the United States.

    Channel: Local Wisdom     |