Location, leasing & long-term view

The old adage of location, location, location is more relevant than ever in Beijing. The additional 300 km of subway line currently under construction means some areas of the city will become increasingly popular and accessible. Projects like Silver Maple Garden, close to Dashanzi, are already starting to have their value significantly enhanced by the nearby line. Construction of shops, restaurants and other amenities can also have an impact on property value, so it certainly pays to consider long-term development of the area when selecting possible investment options.

In sharp contrast to the sales market, Beijing's leasing market was steady in 2006, with a healthy supply of new property keeping rental prices competitive. The Chaoyang Park-Lufthansa Center-Kempinski Hotel triangle continued to be an expat favorite, with its easy access to embassies, businesses, shops, restaurants and nightlife. Suburban villa projects, especially those in the Shunyi area, were also popular with expatriate families with children at nearby international schools.

Lenton was pleasantly surprised after she moved into her Chaoyang Park apartment. She explains, "We haven't had many problems. My husband loves the fact our utilities are all pre-paid and we don't get any nasty bills at the end of the month. The concierge services here are also great-we're pampered far more than we are back home. The only thing I regret is bringing so much furniture from the U.S.-if I'd known how much I could have got here I wouldn't have brought half as much."

In fact, Lenton and her husband are so happy with their current apartment that they've just signed another yearly contract. Darker comments, "If you're a tenant, renewing your lease for a further term is a good option for reducing the rental price and/or getting additional items from the landlord."

Whether renting or buying in Beijing, it is a common misconception that "new" equates to "hassle-free." Foreigners should be aware that brand new property is far more likely to suffer teething trouble than older, more established property. Zhen comments, "It really is worth checking into the developer's background. You wouldn't dream of buying a car without all the necessary paperwork and guarantees. A lot of construction in China is more about speed than quality, and this is reflected in problems buyers have after they move in."

Despite continuous interest rate increases and incessant warnings about the possibility of more government belt-tightening measures, Beijing's rampant property market looks set to receive further huge cash injections from foreign investors in 2007. Beijing's overseas residents will go on buying buildings en bloc, and teaming up with local or foreign partners to develop new projects, in anticipation of handsome returns and future appreciation of the yuan. Further macroeconomic efforts by an increasingly alarmed Chinese Government are undoubtedly in the pipeline, but it seems that market forces will remain the ultimate arbiter of the price of both new and second-hand housing, at least in the short-term.