Septuagenarian sees big potential in capsule homes

PUBLISHED : Wednesday, 23 June, 2010, 12:00am
UPDATED : Wednesday, 23 June, 2010, 12:00am


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Huang Rixin remains determined to turn his unconventional property dream into reality, notwithstanding the fact that the odds seem to be stacked up against him.

For one thing the former engineer is 78 years old - an age when most of peers have settled into comfortable retirement. And another factor is that the central government has slapped a ban on his so-called capsule accommodation.

Huang was inspired to offer his capsule rooms on the mainland after watching a television show featuring capsule hotels in Japan - or hotels offering rooms that are not much bigger in size than a coffin.

He believed the idea could be adapted to China, where housing supply in urban areas is tight and rentals are high.

So Huang rented three 10 square metre rooms in a three-storey building in Liu Lang Zhang, within the North 5th Ring Road area in Beijing, and then spent 30,000 yuan (HK$34,200) to fit them out into a total of eight 'capsule rooms'.

Two of the rooms were converted to provide three capsules each, with each capsule sized about 2 square metres. The third room was converted into two 3 square metre capsules.

The spaces are sufficient for little more than a bed, and tenants shared a single bathroom with the remaining residents on the floor having to use a public toilet outside.

In March this year, after securing a mainland patent, he opened his capsule hostel to tenants. 'They provided a temporary home for the low- income group,' Huang said.

'The monthly salary of a university graduate in Beijing is just 1,000 to 1,500 yuan. How can they afford to rent a flat for 600 yuan a month? The monthly rent of my smaller capsule rooms was 250 and it was 300 yuan for the two larger rooms, which was affordable.'

With the cost of housing a hotly debated issue, Huang became a celebrity on the mainland immediately after releasing his capsule rooms - all of which were leased to tenants within a month.

Huang's rental cost for the three rooms was 1,950 yuan a month and his rental income from the eight rooms was 2,200 yuan, thus generating a margin of just 250 yuan. He hoped, however, that he might be able to profit from the patent that he had secured on his idea.

He was interviewed by domestic and foreign media, and academics at the Shanghai University and the Chinese Academy of Social Sciences admired his idea.

But all that attention drew disfavour from the government, and even from members of his family.

On April 29, the local government ordered that the useable area of a flat for lease could not be less than 7.5 square metres per capita.

The restriction took effect a few days later, which meant Huang had to close his capsule hostel. Undeterred, he now has two contingency plans to fit the new requirement.

He has spent 180,000 yuan to convert two rooms at his four-section compound at Wudaoying Hutong in the Beijing city centre into four bigger capsule rooms. Monthly rent ranges from 800 yuan to 1,600 yuan.

Also, his modular capsule rooms in Liu Lang Zhang have been moved to an aged house in the area, near Tsinghua University.

'My wife was very worried after the government issued the restriction. My son said I should give up capsule rooms and I should treat the investment cost of 30,000 yuan as marketing expenses,' he said.

However, Huang has not given up on the capsule room concept and believes it will be successful on the mainland as property prices keep going up and demand is strong.

'I hope investors will buy my patent right and expand the business. It is profitable,' he said.