[A-List] Dollar Hegemony feeds China Bubble

[Michael Keaney]

As Henry was saying...


Property boom threatens old Beijing

Traditional home sells for £7.1m in part of the city once shunned by
rich

Jonathan Watts in Beijing
Tuesday April 17, 2007
The Guardian

In a dank alleyway in the old quarter of Beijing is a half-renovated
house with a gaping hole where the roof should be. It has no garden or
pool and had, until recently, only a few modern amenities.

But this traditional courtyard home has just been sold for 110m yuan
(about £7.1m) - thought to be a record for a residential property in
Beijing.

It is the latest sign of rising incomes, changing tastes and growing
inequality as the capital undergoes a pre-Olympic housing boom that puts
even London in the shade.

Despite government measures to cool growth, the Beijing housing sector
has never been hotter. According to the local media, average prices in
the city increased by almost 10% in February. Estate agents claim many
luxury homes have doubled in value in three years.

Until a few years ago, most speculators focused on modern apartments in
inner-city tower blocks and new villas in the suburbs. But the
record-breaking home is an old-style siheyuan (courtyard) in the
downtown houhai "back sea" area of the city.

Walled quadrangle residences were popular with the nobility and
courtiers, but after the communist revolution, many were requisitioned
and partitioned for families loyal to the new government. Often
overcrowded and notorious for their smelly communal toilets and unsafe
coal-fired boilers, many of these old neighbourhoods have been treated
as slums by the authorities. In the race to modernise in time for next
year's Olympics, tens of thousands of homes have been demolished in the
city's old hutong alleyways.

In the central area, only 3,000 courtyards remain, giving them a rarity
value that has pushed up prices. The one sold last week was particularly
valuable because it is a huge property, ideal for modernisation, and
close to the city's liveliest lakeside entertainment district.

Each of its 3,028 square metres sold for more than 36,000 yuan, more
than double the price previously fetched by any home in the
neighbourhood. The buyer remains anonymous, though local media have
speculated that he is a coalmine owner from Shaanxi province or a
Russian billionaire.

The new owner will be in mixed company. While many Beijing siheyuan are
still occupied by working class families, others have been snapped up by
wealthy foreigners, senior officials, contemporary artists and the new
rich. Two years ago, Rupert Murdoch was reportedly pressed into buying
one for 30m yuan by his wife, Wendy Deng.

Such purchases can be risky in a city where planners often requisition
land for development. Last October, Beijing's first courtyard auction
was cancelled after an hour because wary bidders failed to meet even the
reserve price of $225,000 (£113,000). But the passage of the nation's
first property law this year and state protection orders for hundreds of
courtyards appear to have strengthened the market.

"The reason courtyards were not that popular before is because people
did not appreciate their value and potential for investment," said Hu
Chaohui, manager of a real estate company. "But they are very special.
They are rare and centrally located. In addition, their prices not only
include the usage value but also the historical and cultural value."

Critics say, however, that "conservation" often means knocking down an
old building and replacing it with a structure in a traditional style.
"The way now is to build fake old. It is not nice," said Ma Yansong, an
architect. "The hutongs attract many tourists. The poor, old residents
are either like actors in a theme park or else they are kicked out so
the rich can buy up the properties. The old community spirit is being
lost."


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