Multinational presence in Beijing has matured and localization is a focus. For example, one major automotive firm is scheduled to localize its entire IT function. Waiting lists at the major international schools are always a good indicator of expatriate numbers. At Lihong we’ve noticed several last minute acceptances at major international schools. This contrasts with last year’s disappointments.

There has been no new supply of viable expatriate housing yet, with a few exceptions, rents remain stable (see below). This is significant as we’re in the midst of the summer family relocation season. Most expatriates moving into a villa community this summer have already signed their lease.

One exception is Beijing’s most exclusive apartment building, Embassy House. Occupancy is tremendous and rents continue to rise (see below). Lanson Place, its closest competitor in the luxury segment has similar occupancy levels. New luxury developments are coming to completion like Xanadu opposite CCTV Tower, but its a strata property and will not match the serviced apartments in maintenance or services. Although in the CBD, it’s at a busy intersection outside the 3rd Ring, with no amenities within walking distance.

As expected, younger expatriates have flocked to Sanlitun SOHO. There are a few unleased units, mostly owned by landlords with high rent expectations. The development’s Sanlitun location and minimalist interiors are strong attributes, but all SOHO China’s developments have superb occupancies in their first lease year. We hope Sanlitun SOHO retains its gloss, and does not deteriorate rapidly over time like many other SOHO developments.

In the CBD, steady demand for some layouts at ever popular Central Park has pushed rents up. Being a stroll to the office for many, and with no competitors in sight, we expect Central Park rents to remain strong.

At Park Avenue, another popular mid-tier development, rents are stable. Early this year Park Avenue’s gym closed suddenly. Members were not give refunds but told they could use the gym at Upper East Side, a 20 minute drive up the 4th Ring road. Needless to say, both tenants and landlords were disappointed. Many had availed of discounts for long term memberships that were sold up to the sudden closure. The gym has re-opened under different management with higher membership rates.

At MOMA, a large development is being built on its North side, where the larger apartment layouts are. We expect noise and dust levels to be high for at least 1 year. MOMA has attracted many French families due to the simple interiors, pleasant gardens and its proximity to the French School in Sanlitun.

In Shunyi, at Riviera occupancy is high but rent levels are unchanged. At Yosemite, rents have climbed (2-6%) over the last 6 months, increases were highest at the smaller townhouses. Being across the road from ISB and walking distance to the British School allows for premium rents. At Rits Garden, we’re seeing deterioration with little interest amongst expats despite being walking distance to popular Dulwich College. Rose and Gingko hasn’t garnered the interest we had expected perhaps due to the darker rooms typical of this Spanish colonial style.

Although rents remain strong due to no new supply of viable expat housing, they aren’t accelerating. Expatriates renewing leases signed 2 to 3 years ago may face a rent hike. Those renewing leases signed last summer will have less to worry about.  As they head for their summer holidays, most expatriates will breath a sigh of relief as the market is cooling down.

Median Residential Rents *

Embassy House (City High-End)
- Apartment 2bed 213sqm RMB43,000/mth[6month Increase 13.2% - RMB38,000/mth]
- Apartment 3bed 314sqm RMB60,000/mth[6month Increase 9.1% - RMB55,000/mth]

Park Avenue (City Mid-Tier)
- Apartment 1bed 97sqm RMB10,000/mth[6month Increase 5.3% - RMB9,500/mth]
- Apartment 2bed 150sqm RMB16,000/mth [6month Increase 0% - RMB16,000/mth]
- Apartment 3bed 178sqm RMB22,000/mth [6month Increase 0% - RMB22,000/mth]

Central Park 3-4 Phase (City Mid-Tier)
- Apartment 1bed 88sqm RMB10,500/mth[6month Increase 5% - RMB10,000/mth]
- Apartment 2bed 139sqm RMB18,000/mth [6month Increase 0% - RMB18,000/mth]
- Apartment 3bed 188sqm RMB25,000/mth [6month Increase 4.2% - RMB24,000/mth]

Yosemite C-type (Suburban House)
- House 3bed 356sqm RMB38,000/mth(Townhouse 4bed) [6month Increase 5.6% - RMB36,000/mth]
- House 4bed 425sqm RMB47,000/mth(Semi-D 4+1bed) [6month Increase 2.2% - RMB46,000/mth]

Beijing Riviera - Upgraded (Suburban House)
- House 3+1bed 250sqm RMB35,000/mth (Type C 4bed) [6month Increase 0% - RMB35,000/mth]
- House 4+1bed 406sqm RMB45,000/mth (Type B 4bed) [6month Increase 0% - RMB45,000/mth]

* Note that these are median rents of a representative sample at each development. Actual rents vary up or down depending on specific unit and specific rent terms.
————————————————
Released: 15 June 2011
Contact: research@lihong.biz

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In 2010, China attracted $106bn of foreign direct investment (excluding investments in financial instruments such as shares). An increase of 17.4% from 2009, according to the Ministry of Commerce. Enough to more than reverse the 2.3% fall seen during 2008. (source: BBC 18 Jan 2011).

Beijing has seen sharp increases in office space occupancy. Foreign companies, especially in the mining, infrastructure and technology have grown their operations and increased foreign staff. There’s also been a rise in medium sized foreign companies setting up offices in the city. German companies in particular have been prominent in this surge.

International school’s are always a good indicator of expatriate relocation trends. Waiting lists at Beijing’s two main international schools, WAB and ISB, are now at peak 2007 levels. In 2009 there were were no waiting lists at these two schools. At Beijing’s German School, there are now waiting lists for several age groups. This has not occurred before.

Supply of quality expat-friendly properties has not kept pace with demand. One reason is that the government is encouraging developers to build low-cost housing and discouraging lower density luxury developments, both in the city and in suburban Shunyi. Lofty property prices also mean that for landlords who purchase properties now, rental returns have dropped from lofty 15% to close to zero. For new investors, rents today fall far short of monthly mortgage payments.

In the city, Gemini Grove and Sanlitun SOHO were the only expat-friendly city apartment complexes to open in 2010. Park Avenue and Central Park remain the most popular mid-tier city expat residential communities. Both have seen rent increases of up to 11-37% (see below). Unusually, it is the 3 to 4 bedroom apartments that have undergone the highest increases. With the completion of high-end office towers at China World Tower 3 and WFC, both within walking distance, demand at Central Park will remain strong.

Embassy House is still Beijing’s most exclusive luxury apartment development. Despite high occupancy and premium rents, Embassy House has not had a viable competitor since opening in 2002. A competitor, The Ascott, has closed. As have East Gate Plaza and Yong He Villas, either because the buildings have been sold, or because apartments are being upgraded.

In suburban Shunyi, Rose & Gingko is the only viable new villa residential community. Occupancy climbed steadily in 2010. Interestingly, the Rose & Gingko developers sold their houses fully fitted-out making them ready to lease for landlords. This contrasts with the earlier trend of selling villas as bare-concrete shells, leaving the individual landlord to carry out all fit-outs. Yosemite houses were sold bare-shell. There are several downsides. Quality and decor varies, often not meeting expat standards. Also, the property management has difficulty doing repairs as the materials and appliances at each house differ.

River Garden, Yosemite and Beijing Riviera and the more exclusive Grand Hills remain solid expat favourites. Expat occupancy is heavily clustered at these four developments. Increased relocations have meant year-on rent hikes of 10-18% (see below). The other ten Shunyi villa communities have not managed to attract the all-important expat numbers either because of deterioration, or because of poor quality fit-outs.

Last June, Mercer’s Expatriate Cost of Living index, ranked Beijing 16th in the world behind Milan, and 6th in Asia, behind Seoul. The city’s continuing rent increases suggest the capital will at the very least retain its place on the ladder. Supply will remain limited for the foreseeable future. We don’t see viable expat-friendly properties (in terms of rent, location, quality and interior decor) being launched in 2011.

Median Residential Rents *

Embassy House (City High-End)

- Apartment 2bed 213sqm RMB38,000/mth [Year on Increase 26.7% - RMB30,000/mth]
- Apartment 3bed 314sqm RMB55,000/mth [Year on Increase 22.2% - RMB45,000/mth]

Park Avenue (City Mid-Tier)

- Apartment 1bed 97sqm RMB9,500/mth [Year on Increase 18.8% - RMB8,000/mth]
- Apartment 2bed 150sqm RMB16,000/mth [Year on Increase 33.3% - RMB12,000/mth]
- Apartment 3bed 178sqm RMB22,000/mth [Year on Increase 37.5% - RMB16,000/mth]

Central Park 3-4 Phase (City Mid-Tier)

- Apartment 1bed 88sqm RMB10,000/mth [Year on Increase 11.1% - RMB9,000/mth]
- Apartment 2bed 139sqm RMB18,000/mth [Year on Increase 33.3% - RMB13,500/mth]
- Apartment 3bed 188sqm RMB24,000/mth [Year on Increase 33.3% - RMB18,000/mth]

Yosemite C-type (Suburban House)

- House 3bed 356sqm RMB36,000/mth (Townhouse 4bed) [Year on Increase 12.5% - RMB32,000/mth]
- House 4bed 425sqm RMB46,000/mth (Semi-D 4+1bed) [Year on Increase 15% - RMB40,000/mth]

Beijing Riviera - Upgraded (Suburban House)

- House 3+1bed 250sqm RMB35,000/mth (Type C 4bed) [Year on Increase 16.7% - RMB30,000/mth]
- House 4+1bed 406sqm RMB45,000/mth (Type B 4bed) [Year on Increase 12.5% - RMB40,000/mth]

* Note that these are median rents of a representative sample at each development. Actual rents vary up or down depending on specific unit and specific rent terms.

————————————————
Released: 9 February 2011
Contact: research@lihong.biz

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The flag-bearing students may have been loud (a fierce Peking & Tsinghua Uni rivalry) at the 2009 Beijing marathon, but few students outran the 50-something couple who cruised past me at 32km on the lonely stretch before turning into the Olympic Park. As I hit my wall-shuffle, she in her hand-patched lycra shorts, was casually discussing pace-time with her husband. Not surprising. Beijing’s youth may be strutting their stuff at the city’s fitness clubs each evening, but it’s the elderly who sweat it out in city parks early each morning, irrespective of weather.

Beijing has a fantastic mountain range 80mins drive to the North, but a dearth of recreational running events. May brings running to the masses.

The North Face 100 is being held on Satuday 8th May up in Changping around the Ming tombs. There will be 10k, 50k and 100k races. Most of the route is on hilly trails. The 50k has 1,700m in ascents. Ascents on the 100k are mind-boggling.

The following Saturday, 15th May, the Great Wall Marathon returns with it’s 5,164 steps.  I’ll be making the most of May by representing Lihong on the shorter North Face 50k followed by 42k on the Great Wall.

Wonder if that couple will be there?

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Size: 300sqm including yard with two date trees, 230sqm living space, large living & dining room, 4 bathrooms, 5 bedrooms, cellar with 4 additional rooms, pantry, washing, fitness room, ayi room and walk in wardrobe.
Description: Courtyard built to energy efficient German standards and design. Old style romantic exterior with modern conveniences and sustainable living concepts. The low energy eco courtyard is powered by a solar system and is fully insulated to keep the place warm & dry in winter, and cool in summer. In addition the courtyard is fitted out with floor heating and a Swiss air filter and circulation system. No nasty oil or coal heating needed and no expensive electricity bills either! Very close to the Hou Hai District, with coffee shops, boutiques, restaurants and bars. But far enough to be quiet and serene.
Asking Rent: RMB45,000/month

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Dear ________,

Thanks for your email. At villas in Shunyi, it’s the heating (mostly gas) and air-conditioning (electricity) fees that are the highest with cost highest in the winter and summer months.

For a smaller 200sqm, I’d budget for an average utility cost of about RMB3,000/month. Costs could vary depending on your usage level. For example, if your family is at home during most days, or if you’re away for a month hot August, your costs will drop.

Note that some houses are more energy efficient than others. Also, some houses have thermostats on each floor or in each room. This allows better temperature control and less wastage. For example, older unrenovated houses at River Garden have one thermostat for the whole houses so you can end up having a 2nd floor room that’s too hot and a 1st floor room that’s too cold.

Utilities are typically paid by the tenant. Some tenants (who have room in their housing allowance) include a utility subsidy into the rent. However, note that the landlord would typically keep any unused subsidy.

Water costs are very low here. Satellite TV fees and family club memberships are typically included in the rent.

There’s more useful information in our FAQ here:  http://www.lihong.biz/beijing-property-lease-faq

Feel free to ask if you have any questions about housing, or living in Beijing.Best regards,

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Beijing rentals droped 15-20% over the last year, but this year’s summer surge in relocations has caused minor rent increases at the more popular housing developments. Waiting lists at WAB & ISB, the city’s two main international schools, have all but disappeared. Yet fees remain static. The survey uses a standard expatriate basket of goods to measure price levels across the globe.

Mercer says the strengthened US dollar (to which the RMB is closely linked) has had a significant effect on rankings. The survey is intended as a guide for assessing expatriate remuneration levels.

Beijing expatriates who buy local products (groceries & petrol) and services (restaurants, drivers & maids) must be smiling.

Read more about Beijing’s expatriate cost of living here: http://www.lihong.biz/beijing-cost-of-living

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Hi J,

Thanks for your email. It gives me a better idea about your concerns and what you’re looking for.

To choose the city or suburbs. It’s a common dilemma. Most parents with school-going children live in Shunyi. While about half the expats with toddlers live in Shunyi, the others choosing the city.

Shunyi Pros: Quieter, away from the city’s traffic. Close to the airport. Very family oriented. Better air quality.

Shunyi Cons: Away from more vibrant city-life. Longer commute to work in the city.

After seeing the properties next week, you’ll have a better idea whether Shunyi matches your family’s lifestyle. I’ll include a few child-friendly city apartments (see the kid’s rating at each property). Space is a premium here, so only some apartments have large common garden areas. Arguably the most child-friendly options in the city is  Park Avenue near Chaoyang Park. I’ll also show you 2-3 other apartment options.

In Shunyi, individual gardens are small but there are larger common play areas. The two main english-language international schools are in Shunyi, but there are expat kindergartens in both the city and suburbs.

Rent difference between townhouses, semi-detached and detached homes are largely related to size. Townhouses are smaller while detached houses typically have larger rooms (and more of them), more spacious gardens and larger total floor space. The semi-detached homes would be something in-between. 

The ratings on our website indicate the quality of houses and property management at each community. This is often (but not always) the major per sqm price factor. In Beijing, you’ll find expensive properties that just aren’t good places to live in. They’re often vacant.

About renovations, this is mostly minor work as repainting the interior, or just a room. It could also be installing some shelves or adding a sliding-door. Sometimes it’s a major gutting-out, but as most expat homes were built within the last 10 years, large-scale work is rare. It’s often an adjustment (done within a week) so that the interior decor better matches your taste.

With an early start and full day viewings, you’ll be able to get an overview on the first two days, and then start zooming in on your preferred residential community on Saturday or maybe even Friday afternoon. It’ll be hectic, but doable as expat homes are in clusters to the east and northeast of Beijing.

Will your daughter be coming next week? If so, let me know so I have a child seat in the car.

Lastly, feel free to ask if you have more questions.

Best regards,

Carol Lu

———————————————–  

Hi Carol

We have been looking at properties again this week and really like the look and feel of properties in Shunyi.  We will be living in Beijing for a minimum of 3 years so we really want a property with good space and open plan living.  We have a young child who is about to start crawling so space for her is very important.  The photos of properties at Beijing Riviera, Yosemite, Le Leman Lake, Dragon Bay, Chateau Regalia, River Garden and Dynasty Garden all look worth a look.

We are also very keen to see the difference between a townhouse and a detached or semi-detached house as there appears to be a big difference in price for these options.

 We would also like to have a look at one or two apartments closer to the CBD, perhaps in Chaoyang Park (Beijing Golf Palace looks very nice). Do you think we can cover all of this on Thursday 15th and Friday 16th?  We are happy to spend full days with you going around the properties as it is important for us to get the right property. Carol, out of interest what types of renovations are usually asked for?  I ask as this type of thing is not normal in NZ when renting a property. I will email you with our hotel details once my assistant has confirmed the bookings.

 Kind regards

J

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