Business is Personal (Finance)

House Hunting

After arriving in China, we spent the first week holed up in my brother-in-law's condo. A lot of time was spent sleeping trying to adjust to the jet lag and time zone differences. In addition, the Chinese people were gripped in the fear of the H1N1 virus at that time so everybody was scared to meet up with anybody who just arrived from the United States.

After our self-quarantine was over though, our top priority was finding a place to live. Our first option was to rent a fairly new unit in a gated community. Unfortunately, Taishan does not have many expats that were not previously Chinese nationals -- I've seen just a few westerners around here who seem not to be just tourists. By comparison, more cosmopolitan cities like Guangzhou or Shanghai has plenty rental stock available for foreigners. Hence, we switched our focus from renting to buying.

In the cities of modern China, here's how housing might be roughly categorized:

Old houses

Cities in China are intermixed with old and new structures. If you see old houses like these in cities, it in all likelihood used to be farm area. Concrete and urbanization sprung up all around them with the farm land perhaps sold for factories, high rises or shopping malls but still leaving the houses standing. In Chinese custom, the ancestral home is the village "herng ha" origin point so even those families that move up in society into better lifestyles will keep their old village houses to make annual offerings. (My dad's ancestral home has sat empty for 40 years or more.) Sometimes the family might opt to knock down their ancestral home and build a new one in it's place. As such, these properties are rarely for sale.

Old multi-stories

In pre-modern China, 2/3/4-story buildings were the dominant style in urban cities. The ground level was for shops with the other levels for living quarters. In today's China, these buildings are still common for shopping districts.The more famous pedestrian shopping districts will have buildings well maintained and the shop area remodelled like any western shopping mall. Older shopping neighborhoods might have remodelled shops but the living quarters will show their true age.

20+ year old condo buildings

As China began their move to capitalism, workers began migrating from farms to cities. In response, multi-story condos and apartment buildings sprang up. They look very aged for two reasons: (1) Southeast China is a tropical monsoon region and the wet weather is rough on building materials. (2) No HOAs -- nobody maintains the exterior of buildings whether cleaning or repainting. Inside though, the units might be newly remodelled and rather comfortable.

10 year old condo buildings

Buildings in the last 10 years have started using measures to be more resistant to the weather. For example, instead of just concrete exteriors, tile is layered over. And in place of metal/wood doors/window bars, stainless steel is used. The interiors will usually be marble tiles wall-to-wall.

New condo buildings

The latest residential buildings have more varying styles and colors. However, they still have same basic idea -- tile and stainless steel. The ground level is almost always reserved for shops.

New condo buildings with elevators

By law, any new building that is 11 stories or taller must have elevators. In smaller cities, this requirement usually limit the skyline. (It's still pretty tiring to walk up 10 stories.) In larger cities though, the new residential buildings tower into the sky 20/30/40 levels up.

New condos in gated communities

The latest housing demand is for gated communities with HOAs maintaining the buildings and providing security for the area. With security, unit owners are able to have have open decks. By comparison, regular buildings always almost have their decks fully enclosed with steel bars. Also common in gated communities are gardens, exercise equipment and play areas for kids. All-in-all, a much nicer environment if your point of comparison is to an urbanized western city.

Elevator buildings in gated communities

The next level up is a high floor with a view in a building with an elevator. For a regular building, walking 10+ stories or more is not considered an advantage. Hence, the top levels sell at a big discount. But if you have an elevator, then the penthouse with a rooftop garden or patio is very desirable.

Rowhouses in gated communities

This housing is reserved for the top businessmen in China. These will start at near 1M rmb in cheaper cities and go up to many million rmb in areas with higher costs of living. Even today's relatively easy mortgage terms in China still require 25%-35% down payment minimum so only the top echelon in China will live here.

Standalone houses/villas in gated communities

Next step up with no shared walls. In the communities I've visited, lush gardens often surround the house with ponds filled with expensive koi fish.

Housing Prices

Like every where else, prices vary depending on location, quality of neighborhood and unit level. For example, the 3rd and 4th floors are most desirable in a regular building. But in an elevator building, the top floor is. And obviously, places with more economic or political activity will cost more. In China, pricing is always given as RMB per PING FONG (square meter) -- I know the rough prices in Taishan so I will give that as a baseline.

20+ year old condo             1000 rmb/pf
10 year old condo              1500 rmb/pf
New condo                      1750 rmb/pf
New condo w/ elevator          2000 rmb/pf
  * only exists in larger cities
Gated community condo          2000 rmb/pf
Gated community condo w/ elev  2500 rmb/pf
Rowhouse                       3000 rmb/pf
Detached house                 3500 rmb/pf

The prices do not included build-out or remodelling. Expect 750 rmb/sf for standard finishing (marble tile floors, stainless stear exteriors, modern bathroom). The cost can go up to 2000 rmb/sf if you want the top quality finishes.

When looking at pricing by size, it doesn't seem like a rowhouse or detached house is that much more expensive than a condo . However, condos typically are 75pf to 150pf (800sf to 1600sf). By comparison, rowhouses/detached houses are 300pf to 500pf (3200sf to 5400sf). So a large condo with elevator might cost 375,000 rmb while the smallest rowhouse would be 900,000 rmb.

Taishan is a city of 300K in a county area of 1M people. There are many cities with much more population and economic activity. My general idea of pricing from overhearing others talk about housing prices in other cities:

Kaiping (600K neighbor city)     X 1.5
Jiangmen (prefecture capitol)    X 2
Zhuhai (Macau border)            X 3
Guangzhou (province capitol)     X 4
Shenzen (Hong Kong border)       X 4
Shanghai (province capitol)      X 5
Beijing (country capitol)        X 6

Our Final Decision

After looking at condos and houses for 3 weeks, we found seemingly the perfect place (sum soi, translation: heart's water). 142.5pf (1534sf), very wide open views from the decks, gated community with security, exercise areas and playground structures and best of all -- a second smaller unit available in the same complex we could use as an office. We called up some contacts and were able to negotiate the price down to 2750 rmb/sf for a 3rd story unit already remodelled and ready for move in.

(Filed in china, housing)