House Shopping In Beijing Is...

…Not my favorite sport. Although, if you want to lose calories, it’s a pretty good workout. Burns a lot of time and energy. It’s a process. At the high end, it’s a ceremony. Better be organized and prepared. My advice: work with a real agent you really like because otherwise, by the time you’re done with house hunting, you may decide to never see the agent again (or look at another house…).

Lucky me, I had the best guide for a property tour. Yoga Yang is her name. She is a Chinese-American top producer with Intero in the Silicon Valley but spends quite a bit of time in the old country. She is my Wikipedia for everything China. Based on my search criteria, she selected a couple of luxury homes truly representative of what you can get for the money (when you have lots of it) in the Chinese capital. To be honest, I don’t have that kind of money to burn and had no intention to buy. Just wanted to get a free education on real estate values. Thank you for not telling the sellers.

Before I take you on the tour, you might want to know a thing or two about the real estate business in China. Not quite what we are used to here, although the Chinese ways tend to progressively copy our model; laws permitting that is.

China is an “open listing” market. More often than not, the broker who brings the buyer gets the whole thing. Hence the interest in fighting for buyers. Lianjia, the company we solicited for the tour, is No.1 in all of China with something like 13,000 agents and 8,000 offices located in 28 cities. They introduced the “exclusive listing” concept in China and are quite successful at “selling” the exclusive agency as the best way to obtain a higher sale price. Pretty much the opposite of the narrative US brokers need to use to invite cooperation and stay clear of the “dual agency” bugaboo.

The real estate market has been and still is a bit of a roller coaster in China. Hot areas may come and go, according to which strings are being pulled at any given time by a central administration eager to control growth and monitor risks. Lately, a series of regulations have been imposed against speculative property investments in order to cool transactions & price frenzy in top-tier cities such as Beijing and Shanghai. After a wild ride that saw the average price multiply more than 10 times over the last 10 years, both the number of sales and values are now somewhat stable or sliding a few percentage points.

Today, the average price in Beijing, a sprawling and ever-changing metropolis of 25 million people, stands at about $1,000 per square foot, with top prices flirting with $3,000. Purchase restrictions and tightening monetary policies made it a requirement for buyers having to finance to put 50% down (was 20% a year ago). The locals can only buy 2 properties and the out-of-towners who want a piece of Beijing can get their wish only once they have paid the local tax for 5 years and obtained the residence permit. And don’t forget that they are leasing the land on which the dwelling is built from the government (70 years). Complicated.

OK, now let’s go on the tour, shall we? The two brand-new properties chosen by Yoga and Lianjia were close to Olympic Park, within the 5th ring (peripheral motorway circling from the center of town). Pretty close to the Northern edge of Beijing since the 6th and last ring borders the rural areas. It’s no small feat to get there in a cab as the traffic reminds me of L.A. at 8am, albeit more courteous but a bit wilder. “Respectful disorder”, if you see what I mean. The neighborhood is nice alright but not that different from others where grapes of skyscrapers are erupting from the ground, here, there and everywhere. Only the number of towers and their style, architecture (daring and striking for many) and overall quality may differ.

The first property we saw (after passing through layers of security and an armada of welcoming committee members) was a 4-level luxury condo in “Palais Violette” with a sticker price of $16M. Great setting in a serene Hollywood-type decor with gorgeous gardens and waterfalls. You forget you are in the city. For the money, you get 6 BR, 8 BA, 1 maid room, 2 kitchens, a dramatic wine cellar (empty), a 1 car parking, a private patio and a “free” bonus room in the basement. The official square footage (actual is 28% more) stands at 7,122, which brings the price per sft at $2,247. The “HOA” fee is a respectable $990/mo. That covers the maintenance of common areas, pool, gym, tennis courts & club house.

The second property was a 3-level single family villa of 7,858 official sft (actual is 10,764) sitting on roughly a quarter-acre. Yes, lots are on the tiny side in town. Too many people, too little space. The asking price? $17M. For that, you get a dream resort-type setting with ponds, waterfalls and exotic plants galore in a beautiful gated community.  

“Runze Palace”, that’s its name, is comprised of 408 home sites (140 already sold), with a luxurious clubhouse (Versailles revisited) and the expected high-end amenities. Not to forget a good number of BR & BA (varies depending on buyer’s wishes) and a lower level meant for an inside swimming pool. The monthly association fee amounts to $1640. Buyers aware: the villa comes naked in a rough cement shell. To dress it up, you might need to add at least another $million. Then you’re talking.

So it is in the Beijing high-end fast lane. Not exactly what we are used to in the US at that price level. Not comparable though. China is China, not the US. Now, if you fancy writing an offer for either one of these two luxury properties (or any other), keep in mind that, as a foreigner, you can qualify for a 50% mortgage only if you have been working in Beijing more than 1 year. Otherwise, it’s all cash. Oh well!