lundi 14 octobre 2013

Renovation of courtyards and renovation of apartments in Beijing

There is a strong evolution going on in real estate in China and especially in Tier I cities such as Beijing and Shanghai.

The price increase has been curbed down in China these 2 past years. The problem is simple, the Chinese authorities fear that tere might be the rashest crisis in China caused by a terrible housing bubble, the biggest ever. There is as well a social problem together with the same proble, since the emerging Chinese middle class which is just emerging has now difficulties to find affordable accomodation in Beijing. This might cause discontent in the public opinion.

For these reasons, the price have been curned down. Actually, the rise in the last twenty years have been unbelivable, an apartment could see its value double in less than 4 years, and some landlords have built fortunes just by buyibg and selling apartments. In such a context, there was no need for renovation, and no interest in it. All the apartments were new, and the investment to renovate an a flat was not worth it.

This has changed and new trends are emerging. The price curbing policy has been a success (at least in Shanghai, it is not that clear in Beijing where there was a 16% price increase last year, only 3% in Shanghai).

In such a context, it is not that easy to maximize the profit when selling an apartement. The solution is to renovate them to have a better price when selling it.

There is as well a cultural shift. Chinese people want to live in better environments, this can be illustrated by the great success in the renovation of Hutongs.

The courtyards were usually a place Chinese people tried to flee when they lived in Beijin. The places were dirty, poorly managed, the location were perceived as far from the business hubs. A whole generation of Chinese city dwellers has longed to leave the traditionnal housing to go in a very modern apartemet, perceived as profgress. Now that China is opening on the world, some Chinese people can compare better what a renovated home can bring for a pleasant life. The renovation is clearly a new trend, some Hutongs are magnificiently decorated and design is smething that interest Chinese people more and more.

The result might be a changing urban environment and better living standards. What will Chinese interiors look like in a few years when things can go so fast in China ?

What s certain is that places that were neglected like Hutongs, old apartement compounds and bad quality accomodation is drawing the attenion of investors. This is the sign that the real estate market becomes more mature.


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