Money

High-end rental rates likely to increase

By Shen Jingting (China Daily)
Updated: 2009-12-29 09:57

The luxury apartment rental market in Beijing looks likely to recover next year after the global economic storm.

Daniel Yin, managing director of CB Richard Ellis Group's Beijing branch, said the rental prices of Beijing's high-end apartments might sink to rock bottom at the start of next year, but he predicted they would start rising again in the second quarter of next year, to hit a growth of between 5 to 10 percent after the middle of the year.

"We can see a big impact from the global financial crisis on Beijing's luxury apartment rentals. Through the first half of this year, multinational companies slowed their pace of sending foreign employees to the Chinese mainland," Yin said yesterday.

"But we are quite optimistic about the luxury apartment market next year, since Fortune 500 firms are becoming actively engaged in Chinese businesses again," Yin added, "There will be an increase in terms of the number of foreign employees dispatched to Beijing."

"The supply of luxury apartments will gradually run short in certain central areas next year," Yin said.

In Beijing, luxury apartments usually refer to apartments that sell at more than 20,000 yuan per sq m. These flats are mainly located in downtown areas like the central business district, Wangfujing and Chaoyang Park area.

Main customers of these apartments are embassy staff, executives at multinational companies and short-term business travelers.

Qin Xiaomei, head of research with Jones Lang LaSalle Beijing, said the luxury apartment rental market has gone through a cold period since the close of the Beijing Olympic Games.

The average rental price reached a peak of 114 yuan per sq m per month in the second quarter of 2008, but dropped to 82 yuan in the third quarter of this year.

Though Beijing's luxury apartment rent is bouncing back, Yin believes it is still below Shanghai.

"Shanghai has more luxury apartments than Beijing, and from my point of view, the rent there is higher than Beijing," Yin said.

Wang Yuming, an MBA student in Tsinghua University and president of a local Internet company who earns more than 300,000 yuan annually, said he believes Beijing's apartment prices are too high.

"I rent a two-bedroom apartment outside the North Fifth Ring Road, and it charged me 7,500 yuan per month. If one day you tell me Beijing has surpassed Hong Kong in terms of apartment rental prices, I could easily believe it," Wang said.