Q & A: Olympics and rents

The games are two months away and developers are rushing to complete their edifices. The exteriors of China World Tower 3 & CCTV Tower will be ready but tenants will have to wait till the end of the year before fit-outs are completed. The Olympic venues are of course ready. Here’s the answers to questions I’ve been asked recently:

Q. Have apartment rents increased due to the Olympics?
A. Rents have increased about 10-15% (varying by complex) in the last 12 months but not for reasons directly related to the Olympics. For August 08, many landlords owning properties in the sub-RMB20,000 range are hoping to rent out their properties for 3-5 times the normal rent rent. This has caused some distortion on rents affecting long-term tenants moving in this summer. If Beijing follows the trend in Sydney and Athens, landlords with high expectations will be disappointed. Nevertheless, they are still high.
For apartments with rents above RMB20,000/month, there’s less of an Olympic effect.

Q. How about rent at serviced apartments?
A. There are still plenty of availabilities, but many serviced apartments are still asking for astronomical rents for August. Will they hold out, or drop their rents in June or July?

Q. Do you expect rents to come down in September?
A. Yes, but by not more than 5%. This will mainly be due to the slack from landlords who (successfully or unsuccessfully) kept their apartments for Olympic guests in August 08.

Q. How about rents at houses in Shunyi?
A. Again, we’ve seen 10-15% rent increases there in the last year but there’s little Olympic effect. Few tenants in Shunyi are associated with the Olympics and the more seasoned landlords in Shunyi are pragmatic. They prefer tenants who provide stable long-term term rental revenue from their tenants.

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