Buying Property in China, Buying a House in China

[benjamin_heathe]

This question is for the more "seasoned" English teachers, or just any expat in general. Originally, we had planned on only being here one to two years, but we like the place so we want to stick around. However, we want slightly(just slightly) nicer living conditions, so...

Has anyone bought property in China? Like a condo or small but nice apartment.

Is it easy for foreigners to buy property here?

Will the bank accept English teaching as a continued salary?

Anyway, hope this is too off topic, but I wanted to consult the English teaching veterans.

[benjamin_heathe]

I just saw the post by michelle on page two.

I think that is more about prices, my question is more about possibility and is it safe.

Just wanted to add her post topic in case anyone else in interested...

[mlomker]

I'm no guru, but I was curious about that as well and have done some poking around. It sound like you can certainly buy a place but that isn't going to give you visa...you still need a legal means of living in China.

'Owning' property typically means the same thing that it does in America to own a condo--you own the air between the walls but that's about it. Buildings age more quickly there than in the US, so maybe 20 years before a building gets knocked down. There are higher quality rentals around if that's what you're looking for.

It seems like a risky proposition unless you've married a local. I understand that mortgages are a fairly new thing in China--most people pay cash for their homes. I would be quite surprised if a foreigner would be able to finance anything at all...

[amo]

I have purchased appartment in China, but then again I am married to a local. The contract is signed by both me and my wife. I also have a permanent residens licens but that do not give me a permanent visa (still have to apply once a year). I guess from your post that your wife is not Chinese and in that case I do not know how easy/hard it is to buy. And as stated above, we paid cash because getting it financed here as a foreigner is NOT easy.

[david.lodge]

as a foreigner you can own property but you have to pay cash and in some locations if you sell the property again in less than 2 years you will pay a capital gains tax. unless you are in a hotbed of property price inflation (shanghai, shenzhen) i suggest you rent, landlords love foreign tennants because we dont trash the place the way some locals do.

[wiley]

I'm creeping up on my fourth year in Beijing, ever since my second year I've considered the wisdom of buying property in China. I've come to the conclusion that even though I see myself living here for the indefinite future, buying just doesn't make as much sense as renting for a foreigner. I've got a few gut feelings and a few anecdotes that have always led me away from the idea of purchasing and here they are in no particular order:

1.) Housing prices (in the Beijing market anyway) have done nothing but go up steadily for the 4 years I've been here. For me, there are SO many reasons not to buy at current prices. Current prices are totally out of whack with local salaries. Building quality is terrible. All the "nice" apartments in wudaokou are looking worse and worse with each passing year. Prices may never come down, but until quality goes up, I wouldn't buy.

2.) God I love living in China, but I have learned to expect that as a foreigner you will be relieved of your cash at every possible moment. No one will stick up for you and you will always be the last person on the gravy chain. For housing owners this means: Higher initial price, larger sales commisions, larger down payments, no relief on taxes or interest rates, getting jacked on renovations and repairs, and assurance of being totally blindsided when it comes to things like - your complex getting razed. While it might be possible to avoid or lessen the impact of some of these individual items, you'll have to fight for them. My good mood is worth way more than money to me, I'll rent and sleep peacefully at night.

3.) You don't own the property. If anyone in power decides that they want it, it's their's, end of story. If the international political climate changes. What's stopping the government from, say, stripping all of those American/British/Japanese/non-Han imperialists of their property in China. Think that's extreme? Go find me a foreign government or bank that allows property in China to be used as collateral on a loan. That's how stable an investment in real property in China is considered on the global market. Also, no one knows what happens at the end of the 75 year leases from the government.

4.) I have a nice small apartment that I rent with a roomate for $3,750 a year. My room costs me $1,600 a year. And I live in a fairly expensive part of Beijing. When rent is this low, can you afford to buy?

5.) I have friends who bought a house in Yayuncun two years ago. Interest rates on their mortgage are going up. The developers lied about new buildings that are going up next door, now they have no view. They can't do jack about these things. I'll stand by the assertion that real estate is the blackest of markets in China. The sorts of people involved in real estate deals in China (on any level) make me scared and I don't want my life to be involved with theirs in ANY way.

I feel like I could go on and on. Owning a house in Beijing: What a headache, and at the end of the day its not even yours. Rent cheap and live rich. I'd love to hear stories from people who don't agree - does anyone who bought a house in Beijing recommend that people do that right now?

[self-taught-mba]

Wiley,

Thank you so much. very objective post backed up with examples and facts. Very good point about the collateral for a loan--that says a lot for me.

[flameproof]

Buying makes sense when:

1. Rents are very high and buy prices are low.

2. Your company give you a housing allowance you can use as a mortgage pay off.

3. You plan to stay for a few years in one place.

I would not count on price increases. But you will be more safe with high end properties.

Foreigners can't get financing in China? I have a few friends who got bank loans.

A word of caution: don't buy property in the name of your girlfriend. One day she will be gone and it flat is legally hers then. I heard that story plenty of times.

[mr.stinky]

collateral: my girlfriend used her deed as collateral for a bank loan. china construction

bank will loan up to 70% of the appraised value.

[Ding Yiyi]

collateral: my girlfriend used her deed as collateral for a bank loan. china construction

bank will loan up to 70% of the appraised value.

3.) You don't own the property. If anyone in power decides that they want it, it's their's, end of story. If the international political climate changes. What's stopping the government from, say, stripping all of those American/British/Japanese/non-Han imperialists of their property in China. Think that's extreme? Go find me a foreign government or bank that allows property in China to be used as collateral on a loan. That's how stable an investment in real property in China is considered on the global market. Also, no one knows what happens at the end of the 75 year leases from the government.

Wiley stipulated a foreign bank.

[mrtoga]

I would seriously take the environment into account when buying a house. Personally I think a place on the coast in Shandong (Qingdao, Weihai, Yantai) or in Dalian would be a good investment. As the pollution in the inland areas and main cities worsens people will look to move to the coast, particularly when they get older and start having breathing problems. There are still a lot of relatively cheap places available in and around these towns

I would not buy in Beijing, but then I would not rent there either. For all of its cultural and business importance, I just can't take the bad air.

As for your legal rights, they are more well-protected than they were a couple of years ago. However I would still take independent, professional advice when making the purchase.

[banjo67xxx]

Here's my own experience of buying in Jinan, with my Chinese wife.

Location:

You need to know the area, other developements likely, the build quality etc. That's why my wife's local knowledge of the city was helpful in knowing that all the polluting factories are the opposite end of town. The developement is at the bottom of a small mountain, and in front of us is our property management offices and tennis courts. So being on the 7th/8th floors and elevated altitude even if something does get built in front of us, its gotta be atleast 20floors to block our view. The property is only 1 year old, so we've got another 69years to enjoy it before the government lease on the land beneath expires.

Finance:

As for finance, we paid cash, its a lot simpler than trying to get finance. You'd need a pretty high Chinese income to afford a mortgage on a 1.2m kuai property in any case.

Getting stung:

The first property we wanted to buy we paid the estate agent RMB10,000 deposit, and then the seller couldn't sell under a "5 year rule". Not sure if this is an absolute rule or just a capital gains tax exemption rule. Anyway, the estate agent decided not to return the deposit because we had to go to England for a while and he knew that would make it difficult to sue him. We hired a local lawyer to sue him anyway, and his next excuse was what do you need 10,000 kuai for anyway your husband is a rich foreigner, its nothing to him. After being advised of the various legal tricks and the length of time it would take, and what our solicitors bill would be, we ended up settling for he return of only 5,000 kuai.

Continuing getting stung:

The decorating company we are using keeps forgetting to specify minor details in the plans (which my wife says is standard practice), so whilst we the work is in progress the bill keeps creeping up & up & up (luckily, we knew this in advance so we've budgetted for it). We're currently half way through the decorating process ...

If anyone's interested in the latest news, we can create a blogsite for our experience ...

[dan ni er]

Although property prices in China are high relative to local earnings, I still think property prices in china can only continue to go up. As China continues on the road to becoming a developed economy, earnings will continue to go up, and so will property prices.

In the UK many say that there is a social stigma attached to renting and so everone wants to buy their own place. Whereas in Germany, they prefer to rent as they feel renting gives them more flexibility and they don't want to be tied down to a mortgage at a young age.

I feel that the Chinese are similar to Brits in this respect and would always opt to buy their own place rather than rent - which is a vital ingredient for rising property prices.

However, although I think China is a good place to buy, I am not sure whether it's a good place to buy-to-let. My only concern is that if I bought, but then decided to leave China at some point in the future, in the absence of any family, I just could not trust anyone to help me rent the place out. Not like in the UK where you could leave the keys with a letting agent and they would rent it out and pay you the money. I would fear that in China the letting agents would rent it, but tell you it's not let, and keep the rent for themselves knowing you would never know.

Furthermore, I think the Chinese (I don't want to offend anyone by saying this) do not respect other people's property. If you had a buy a place to let you would have to be prepared for it to be periodically wrecked (although this could easily happen in the UK too)

Therefore, if I was in China for the long term I would consider buying as I think there's still mileage for prices to go up. However, I'm not sure whether I would buy a buy-to let place, but if I did I would buy a place in BJ or SH, which could be let to corporate tenants - high rent, good yields and more reliable tenants.

[djwebb2004]

Oh dear, this country has so many pointless regulations.

It may seem ridiculous, but I bought a flat in Kunming while a student at the university. I was on an X visa, and now am on an F visa. That was shortly before the rule came in that foreigners could only buy property if they had been on an X or a Z visa for more than one year (is that right)? So, am I right, that if I sell up and move to Chengdu, for private reasons, in the summer, I can't buy property in Chengdu unless I get a job and a Z visa for a year? Also, does the requirement that you can only buy one property to personally live in, mean that I cannot just lock up my flat in Kunming? I think the rule was to prevent foreigners from buying properties and then selling them a little later to take advantage of the capital gain, without moving in in between. But if I have already lived here for 1.5 years, and all my furniture and effects are still in the property - it is still for my personal use whenever I am back in Kunming - can I just lock it up and come back periodically?

[cdn_in_bj]

It may seem ridiculous, but I bought a flat in Kunming while a student at the university. I was on an X visa, and now am on an F visa. That was shortly before the rule came in that foreigners could only buy property if they had been on an X or a Z visa for more than one year (is that right)? So, am I right, that if I sell up and move to Chengdu, for private reasons, in the summer, I can't buy property in Chengdu unless I get a job and a Z visa for a year? Also, does the requirement that you can only buy one property to personally live in, mean that I cannot just lock up my flat in Kunming? I think the rule was to prevent foreigners from buying properties and then selling them a little later to take advantage of the capital gain, without moving in in between. But if I have already lived here for 1.5 years, and all my furniture and effects are still in the property - it is still for my personal use whenever I am back in Kunming - can I just lock it up and come back periodically?

I think you should professional advice regarding this, as I understand it if you have more than one property the second one is considered commercial property, even if you are not renting it out. The legal way for a foreigner to own multiple properties is to set up and buy through a Wholly Owned Foreign Entity. Please have a look at the following:

http://www.chinalawblog.com/chinalawblog/2007/02/foreign_ownersh_1.html

[ms2002sss]

Continuing getting stung:

The decorating company we are using keeps forgetting to specify minor details in the plans (which my wife says is standard practice), so whilst we the work is in progress the bill keeps creeping up & up & up (luckily, we knew this in advance so we've budgetted for it). We're currently half way through the decorating process ...

Would like to know how this goes? Would love to know what to look out for once I finally have the cash to start decorating. From my estimates so far I think I need around £25,000 to decorate as i wish.

I have brought a house and am currently saving to decorate it. We went to many stores, some impressive "big" stores and some not so impressive "cheaper" stores (recommended by my Chinese father in-law). He claims its all the same stuff and quality. Natrually I was impressed by the big stores and had doubts about the cheaper stores, mainly due to the presentation.

Q1 - Are items and goods from these cheaper stores infact the same product, and just as good as identically looking but higher priced goods from the larger stores?

So we are in the big stores and get some estimates on costs, times and guarentees for , in this case, flooring. The cost was fixed with fitting included, times were pretty quick and the guarentee was "lifelong". When doubting this they claimed anytime I could call the store with any problem and they would fix it. Using the stores reputable name as proof of not closeing up shop and running.

Q2 - Can you trust the quotes and guarentees from Chinese shops (cheaper & large)

Q3 - Do you pay all the money upfront or do you hold a % back until the job is complete?

Q4 - Once my floor/kitchen/wardrobes are fitted will I be left with a messy room, or do the workmen clear up after themselves?

Q5 - Is it better to decorate what I can afford to bit by bit, or do the whole place in one hit? I'm unsure as decorateing already done before we move in wont have the new feeling if we move in 1 or 2 years later. Balance this against Chinsese prices rising and the £ haveing a wosre exchange rate in 2 years. What do people recomend?

Would love to hear from anyone who has already done all of this so I can be prepaired

Thanks

[venture160]

banjo67xxx -

I lived in Jinan for a bit back in 2004 studying at Shandong University. At that time most of the roads in the city were being widened and the dust/partical pollution was terrible, we could go 1-2 weeks without seeing the sun, it was worse than anything I saw during my 12 months living in Beijing. Also I know the city is ringed with petrochemical plants and there are large quaries just outside the city limits. Are things still bad there? Have they gotten any better?

I would imagine real estate there is still fairly cheap when compared to the coastal cities of Qingdao. Is Jenny's still the only place to get decent food outside of Sofitel?

[magores]

Interesting that that this topic just came up.

I'm currently thinking about buying property in Beijing.

But, I have some of the same concerns as others..

-quality

-70 year lease

-resell value

-etc

Beyond the yes or no question, there is also the "when". Now? A year from now? In a couple more years when I can apply for permanent residency?

Good topic. Good insights.

Thanks all

[djwebb2004]

1. £25,000 - would buy you a new apartment in Kunming. Of course it would depend on the location, but there are some new buildings where the price is 4000 yuan per square metre. The decorations would not cost anywhere near £25,000. I met a Chinese the person in a lovely 120 sq metre new apartment with a nice environment. The apartment cost 360,000 yuan, and the decorations and furniture a further 60,000 yuan!

2. What 70-year lease? Chinese property laws are a bit imprecise, and it would not be correct to try to enforce Chinese property laws into Western categories. Chinese property is not "leasehold"; it is not as clearly defined as that, and there is no ground rent. The land underneath the building belongs to the government, and you get the right to use stateowned land, which costs 1% of the sale price of the apartment. After that, there is no ground rent, and as the PRC has not existed for 70 years, it is totally unclear what will happen eventually. The privatisation of land has been mentioned, but never come off owing to fears of large number of peasants losing their land and then having no means of self-support. They may just roll over the 70 years with a minimal fee at the end of the term. Or the government may eventually decide to privatise land, and may charge a fee for you to buy the rights to the land outright. As you can see, it is quite murky. It is not "leasehold" as such, where the various rights are well-defined in law.

[ms2002sss]

I went to China (Hunan) with every intention of buying a place within my budget. I saw 20-30 different places which my inlaws has sourced. Huge variation and some lovely designs and locations. 90% of which I could see myself living in. Unfortunatly the 1st place I saw, which was well over budget, I fell in love with and nothing else was upto that standard. When I was originally offered it, while still in England they wanted 3000msq. I didnt want to buy from photos and without looking at other options, so when I purchased it 1 month later they had put the price upto 3500msq. 1 hour after I had brought it I was offered 3600msq for it. Instant profit! 2 years later my moving plans have been delayed by over spending on the property. Just yesterday I was offered 4500msq, hours after news of major benificial developments happening in the area which they thought I didnt know about!

Anyhow, thats the background. Here is a rough guide to how I got my £25,000 estimate. If anyone can see where I might be overpaying then advice would be appreciated. All the prices I got from local shops 2 months ago. Bear in mind I am trying to build my dream home, not just make it liveable. I have also tried to overbudget rather than underbudget.

Prices in RMB

22,000 - Labour (Painting, plastering, fitting)

2,680 - Paint (10 cans)

3,680 - Solar water heater

2,000 - 20,000 - Sofa (Huge choice 14,500 for the one I liked on the last visit)

23,500 - 40" Sony TV, Ideally I want bigger but the Sony 52" is 68,000 and the 50" LG at 22,000 didnt have the spec I want. I have seen a 63" in the UK but they didnt go that big in China. Does anyone have experience with TCL or Hisense TV's as they were also avaliable but I am unfamiliar with the quality on those makes.

200 per msq - Living room flooring. (Huge choice with ceramitic flooring. How cheap can you go before the quality is not worth going that cheap?)

5,800 - Laptop. I'm thinking of buying before I go. Not sure on the quality if I buy in China, but also not sure if a UK laptop will be designed to cope with the China heat?

9,500 - Midea aircon. Big one. Good make?

9,000 - A huge fishtank. 9000 was the price of the biggest one I saw, but it wasnt quite big enough for the space I had in mind. Anyone ever had a custom tank built?

6,080 - Electric fire with surround/mantleplace. Difficult to find fires in Hunan, but found 1 place!

500 per msq - Glass wall...its a design thing...(100 - 1000 per msq)

10,000 - 20,000 Bed. Huge choice again.

1,500 each - Wooden internal doors. 1500 from the cheap shop, 1900 from the nice shop. Looks the same. Is the quality different? Worth and extra 400 per door?

170 - 228 per msq for wooden flooring. Again is the quality worth the extra. I cant tell if it is any better, only the shop looks nicer.

1,000 per msq - Handmade fitted wardrobes. Resonable?

680per msq - Wardrobe doors, not included in price above. Very nice looking.

???? - Office/study desk? How much for a nice one?

7,250 - PC...Same questions as the laptop.

380 - Safe...Recommended? How important would you rate having a decent safe? compared to just a safe. if people want in, will they really want in, or would the majority of people be chancers and wont bother with the hassle?

5,680 - LG Washer Dryer

6,800 - LG "USA style" fridge freezer

1,300 per msq - Fitted kitchen. Again higher prices for better looking shops

1,080 per msq - balcong doors. Double/triple folding or sliding doors

322 per msq - Bathroom walls and floors

8,150 - Big round jacuzzi bath

1,450 - Nice toilet

3,540 - Nice sink

This is the majority of stuff. Totalled up allowing a couple of grand for unseen/unthought of things it comes to roughly £25k

Where can I save cash? This is my watered down estimate. 1st time round I got to £35,000 before choosing things to cut. (I suppose I dont really need a 40" TV in my bedroom etc)

Can anyone see any areas I might be able to shop around for better deals?

Windows, I cannot find any decent windows for my balcony. Do they exist? I am looking for double glazed (for winter time) that can all be slid back (summertime) so I can enjoy the breeze and the view.

Underfloor heating. The neighbours have it but told us not to bother. Said its very expensive to run. Can anyone confirm that?

I know its long msg and a bit disorganised (thinking of new questions all the time), but I would appreciate if anyone could make suggestions in any areas. I also hope this might help anyone else in my situation trying to estimate.

It took me 1 month, a trip to china, and a whole lot of strange stories to get these costings! China is an eye opening place for a forigener. If you go off the beaten track, its crazy! I love it