Amid Beijing’s sky-high home prices, parents go underground
Subbasements are becoming the fastest growing category of residential real estate in the Chinese capital, especially around school districts
Wu Zhen, a Beijing mother of a three-year old, was scouting for a home for her daughter’s education when an agent introduced her to a “subbasement (半地下室)” property.
Like most potential home buyers, Wu’s first reaction was a frown.
Basements bring to mind dusky, shabby holes with inadequate sanitation and heating during the Chinese capital’s brutal winter months, the typical abode of migrant workers who can’t afford anything else.
A visit to a subbasement in the Shaoyaoju(芍藥居) area changed her mind.
“The flat is just one third beneath the ground, with a window through which the sun shines. It’s also well decorated, occupied by the owner’s nephew instead of tenants,” said Wu, 31.
Wu isn’t alone. As residential property prices continued to defy the Beijing government’s cooling measures and ownership restrictions, more and more buyers are being driven underground.
Subbasements and other types of below-ground residences have become the quickest-growing category of real estate for middle class families in the Chinese capital, especially those seeking to be located close to city’s best schools.
Most of Beijing’s elite schools are concentrated disproportionately in a downtown area that occupies a mere 1 per cent of the Chinese capital’s municipal jurisdiction.
That’s driven the prices of residential property past 100,000 yuan per square metre (HK$10,375 per sq ft) in the Xicheng(西城) and Dongcheng (東城) districts, where most of the best schools are concentrated, as Chinese middle class parents scramble to squeeze their children into these schools.
For some, underground properties are the only option left.
As many as 616 basement units were sold in the first eight months of 2016 in Beijing, mostly in the Xicheng and Dongcheng districts, according to a report by Yunfang Data, a real estate consultancy.
However, poor lighting and ventilation in basements still deter many buyers, concerned about the adverse impact on their children’s health, especially since Beijing already suffers from among the country’s worst air pollution. The city’s government had also been cracking down on basement units that are often subdivided into squatter units for migrant workers.
That has made subbasements slightly more appealing.
“Subbasements are a great option, as the earliest buyers of the school district homes (學區房) are concerned about changes in school distribution policy, while the latecomers are worried that prices have surged to an unaffordable level” said Fang Lin, the father of a preschool child.
A Xicheng subbasement close to a top-notch primary school was sold this month for more than 9 million yuan, equivalent to a record 100,000 yuan per sq m.
Beijing News, a local newspaper, reported that the price of subbasements have risen 20 per cent on average this year.
The price resilience of these homes in prime locations have raised confidence among some buyers, even if their proximity to schools are taken out.
Wu wants to send her daughter to the prestigious Chaoyang campus of the High School Affiliated to the Renmin University (人大附中朝陽分校), but can’t afford the 90,000 yuan per sq m asking price for homes in that district.
“That means a typical 80 sq m flat in this neighbourhood is priced at nearly 7 million yuan,” said Wu, who works in the media industry. “I’m a second-home buyer so I have to pay half of the price as down payment, plus various taxes.”
By comparison, the 58-sq m subbasement Wu saw was almost a third cheaper at 61,300 yuan per sq m, pricing her two-bedroom home at 3.55 million yuan, well within her budget.
The monthly rent of the Shaoyaoju’s subbasement apartment is about 4,000 yuan, cheaper than the 5,000 to 5,500 yuan of comparable above-ground homes, said a Homelink Property agent responsible for the area.
Buyers can lease their property even if the owners don’t want to live there, said the agent, who declined to be named. There are only five to 10 subbasement properties in the Shaoyaoju area, all of which share the same ownership rights as other above-ground homes, the agent said.
“At my age, the only thing that’s kept me awake at night is about my child,” said Wu, who has yet to decide on her purchase. “Unfortunately this issue is really difficult,” she said.