I recently read a couple of unconnected articles that suggest that now is a good time to buy real estate in Beijing. Prices are dropping. Restrictions on foreigners buying property in Beijing have been lifted.

If you’re renting an apartment in Beijing and have plans to stay there long term, it’s time to consider buying an apartment instead. If you’re thinking about investing in international real estate, consider Beijing as an option.

This is an interesting topic for me. Although we ended up deciding not to buy an apartment in Beijing, we did set out to buy one back in 2006. We researched the process, visited Beijing real estate agents, looked at apartments etc.

Beijing Property Prices Predicted To Fall

The China Daily reports that the average cost of a Beijing apartment is poised to fall:

The average house price in Beijing will plummet by as much as 20 percent as buyers snap up cut-price homes, according to the Beijing Academy of Social Sciences.

Prices have been predicted to fall before, without a reduction ever eventuating. However, this time it seems much more likely, due to two factors:

1. The global financial crisis: This has resulted in Beijing’s property market stagnating.
2. The influx of cheap price-limited condos: Although foreigners can’t buy them, their existence will drive down the average property price in Beijing.

Combined, these two factors mean that the price of a Beijing apartment is likely to fall. Predictions are that the housing market will recover by the end of the year, so there’s no time like the present.

Restrictions On Foreigners Buying Real Estate Lifted

The China Daily also reported that restrictions on foreigners buying real estate in Beijing have been lifted throughout 2009. This seems to be directly related to revitalizing the sluggish property market.

The restrictions were introduced in 2007 and were aimed at preventing foreign investors driving up the housing prices in Beijing:

In 2007, the local government issued regulations stipulating only expatriates living in Beijing more than one year and those who could provide details proving they would be the primary inhabitants could buy one house.

This resulted in a dramatic drop in foreign investment purchases:

Foreign purchases accounted for seven to eight percent in all the real estate transaction in Beijing before the regulation took effect. After that, the number dropped to 0.5 percent, he said.

Now, these restrictions have been lifted, meaning that foreigners can buy as many properties as like, without having to live in them. Heaven for investors.

Although the article doesn’t say whether the restrictions will be re-introduced next year, you’d have think that there’s a real possibility of this happening. If so, now really is the time to buy real estate in Beijing.

Reasons Not To Buy Property In Beijing

Although it appears to be a good time to consider buying property in Beijing, there are some things you need to be cautious about:

• Building quality: some of the Chinese buildings I’ve lived in have been of terrible quality, with cracks appearing in walls, leaks springing from the roof, water logged walls, you name it! Whilst most buildings aren’t this bad, there is a nagging doubt in my mind regarding the quality of buildings in China.
• Understanding the process: The process of buying a house in Beijing can be complicated. You’ll have to deal with laws about what can be bought (some properties are reserved for certain demographic groups), paper work, legal agreements etc. It’s probably not much more complex than buying a property anywhere else, but it’s all done in Chinese. You’ll get translations etc, but you’ll have to trust the person translating and you can be guaranteed there’ll be some confusion during the process.

I’m sure there are plenty of other reasons not to buy a Beijing apartment. On the other hand, I know people who have bought apartments and haven’t had (m)any problems. So proceed with caution and do your research!

Final Thoughts

The price of a Beijing apartment has fallen and the restrictions on foreigners buying property in Beijing have been lifted. Cheaper and easier to buy – sounds like now is the time to buy.