Beijing: Residential Rental Market

Stephen Chung

Managing Director

Zeppelin Real Estate Analysis Limited

October 2006

(Based on Data from the China Real Estate Index System CREIS)

Many residential real estate reports on China tend to focus on sales and purchases and if rentals are involved, they tend to be related to the prime or luxury properties. In this article, we shall seek to throw a light on the Beijing general residential rental market which in some ways may better reflect the overall economy and real estate sentiment in the city. A few notes on the general residential rental market first:

1)      Mass residential rental properties = the properties are mostly non-luxury, including but not limited to private, public and / or economic-assisted housing units, in the main districts of Beijing and rental rates quoted herein are in Yuan per month unless otherwise stated.

 

2)      Only accommodative residential rental properties are counted = i.e. they come with the basic amenities such as water, heating, electricity, and generally accommodative interior finishes and furniture.

3)      The rental rates are further categorized by number of bedrooms the residential units have = 1 bedroom typically ranging within 30m2 to 60m2 in floor area, 2 bedroom ranging within 50m2 to 80m2, and 3 bedroom units ranging within 70m2 to 100m2.

4)      The sampling base = is roughly 30,000 units as listed and reported by various realtors.

5)      The data = is based on figures reported for the month of July in 2006.

6)      Rental index = the rental levels in December 2005 is used as the base index of 1,000.

Here are some of the observed market rental rates and trends:

A)     Rental rates in July 2006 have risen some 12.40% since December 2005 = and the average rental   rates in Yuan per month for a 1 bedroom unit, 2 bedroom unit, and a 3 bedroom unit are 1480, 1977, and 2820 Yuan / month respectively [Roughly 8.11 Yuan = US$1.00]. 

B)     2 bedroom units occupy the largest % share with 47% of transactions = while the 1 bedroom units and 3 bedroom units transactions occupy roughly 33% and 20% respectively.

 

C)    In terms of districts = Chaoyang and Haidan districts collectively occupy some 64% of transactions. Please refer to the following table for details.

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Chaoyang

38%

Xicheng

8%

Haidan

26%

Fengtai

3%

Dongcheng

13%

Xuanwu

3%

Chongwen

8%

Shijingshan

1%

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D)    Demand = reportedly, it comes from several sources including prospective home purchasers who amidst various cooling measures wish to let the dust settle before jumping into the market, parents and college students attending school in Beijing, and migrants from other parts of China relocating to Beijing for opportunities and work.

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E)     In terms of rental rates in Yuan per month by districts = please refer to the chart below.

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Districts

1 bed

2 bed

3 bed

Chaoyang

1487

1942

2159

Haidan

1474

2012

2644

Dongcheng

1525

2199

2989

Chongwen

1624

2054

2906

Xicheng

1372

1817

2179

Fengtai

1359

1589

2172

Xuanwu

1359

1758

2293

Shijingshan

850

1254

1460

Compared to the expatriate housing market, which rents may easily range in the thousands of US$ per month with some exceeding US$10,000, the rentals for the local populace appear to be bargains, though this may not exactly be the case to most locals if typical local household incomes are used.

Perhaps this would give a feel for the disparities which may exist between essentially two broad but different market sectors.

Notes: The article and/or content contained herein are for general reference only and are not meant to substitute for proper professional advice and/or due diligence. The author(s) and Zeppelin, including its staff, associates, consultants, executives and the like do not accept any responsibility or liability for losses, damages, claims and the like arising out of the use or reference to the content contained herein.                   

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