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    China Business
     Apr 28, 2010

China's 'homes' feel the squeeze
By Olivia Chung

HONG KONG - Soaring property prices in Beijing and other Chinese cities are giving rise to a new line of accommodation - "apartments" little wider than a narrow bed and hardly a meter longer, earning landlords ready cash at little cost and snapped up by young workers on low pay, often with families to support back home.

Each small apartment, at 2.4 meters long, 0.90 meters wide and 2 meters high, has space only for a single bed and a dressing table, with TV set and Internet connections.

"The rented places are just like individual toilet cubicles put in a room. How can people live there?" was the broad response from the general public who saw a picture posted by Internet blogger Zhang Qi of her living space in Beijing. [1]

Zhang, apparently the first tenant of such a compartment in

 

Beijing, disagrees, appreciating the privacy that comes with three walls and a front door and at a price she can afford. The Shanxi native, who earns about 4,000 yuan (US$586) a month at an advertisement company in Beijing, pays 250 yuan rent monthly for the compartment in the capital city, the first of its kind in China. Before moving, she shared a flat with a roommate at 800 yuan per month.

"Now I can save more money for my mom and siblings who live in my home town," Zhang said.

The bed is placed hard between two walls in the roughly two-square-meter rented space, so Zhang has to crawl over it before she can sit in front of the dressing table. A canopy of wire netting is intended to create some air flow and make the room light.

Zhang's compartment, or capsule, is one of the eight built by 78-year-old retired engineer Huang Rixin. Having renting three rooms on the third floor of a three-story building in Liulangzhuang, Haidian district, Huang renovated them into eight capsule rooms, his eye on the many college graduates, and other potential customers, working a 15-minute bus ride away at the high-tech hub of Zhongguancun.

Huang's entrepreneurial move was inspired by Ant Tribe, a well-publicized book about new graduates who make little money and are forced to live together like ants in small apartments in villages in Beijing.

Huang hoped to provide better accommodation for such "ant tribes". He spent about 30,000 yuan to build eight capsule apartments in the three rooms, completed in March, for which he pays about 2,000 yuan rent every month and charges 250 yuan and 350 yuan per month for a 90-meter or 120-meter space.

"I was deeply disturbed by college graduates who are forced to live in slums far away, and have to take hours to go to their workplaces," Huang told Asia Times Online.

The compartments are similar, though more basic, to sleeping capsules available in Tokyo, but there they tend to be rented by the night by salaryworkers unable to get home on any particular evening. Huang's creations are for more long-term residents.

The style of living does not appeal to many Chinese who read of his business. "The compartment makes me feel cramped. It is like a coffin," said one Internet surfer. "It's tragic that people need to live such boxes," said another.

Resident Zhang is open about the drawbacks. "As the walls are not soundproofed and the roof is almost empty, it is quite noisy when the migrant workers, who live next door, talk on their mobile phones," she wrote on her blog.

Due to the limited space, Zhang, along with other tenants, has to use a public bathroom and a public toilet outside the building where she stays. But she adds: "Despite the inconveniences, I got used to the room very fast. I can feel it is mine with all my stuff, little and individual, so it's really a good choice for new graduates needing space and accommodation close to their work place."

As many as 6.3 million students will graduate this year alone. According to Ant Tribe many, earning less than 2,000 yuan a month, are forced to share rooms, with six people in some cases living together in a 10-square-meter apartment.

Despite negative comments about the capsule apartments, Huang's eight units are fully rented out, providing a small but useful income as he lives with his wife on monthly pension payments totaling only 5,000 yuan. The demand confirms his belief there is a market in China.

"I have been receiving calls every day from potential tenants," he said. "Now I am looking for public-spirited individuals or corporations to build capsule hostels, with an initial plan to build 50 capsules involving a cost 200,000 yuan," he said.

Huang said he had no plan to profit from the proposed project, so hopes to offer a rent lower than the current 250 yuan.

Demand is likely to remain strong, given high property costs. Home prices in China's 70 major cities in March were up 11.7% from a year earlier, the biggest year-on-year increase for a single month since the National Bureau of Statistics expanded its coverage to 70 cities in July, 2005, and up from 10.7% in February.

Strong demand is helping to boost profits at companies at the opposite market extreme from Huang's small operation. China Vanke, the country’s biggest property developer by market value, this week said its first quarter net income rose 46.5% from a year earlier to 1.13 billion yuan.

Still, central government measures to curb speculation in the housing market and rein in rising prices may be starting to bite. Vanke's first-quarter sales declined to 7.5 billion yuan from 8.16 billion yuan in the first quarter last year, and its latest profit was 53% down from three months earlier.

Last week, the State Council ordered banks to raise minimum mortgage rates on second homes to at least 1.1 times the central bank's benchmark lending rate instead of 80% of the benchmark lending rate. A second-home buyer must hand over a down-payment of 50% of the purchase price rather than the previous 40%.

That will be little consolation for people across the country seeking out variations of Huang's mini-compartments, with "Ant Tribe Hostels" seen nationwide. In southwest Chongqing municipality, a 200-square-meter flat on the fourth floor of a building in Gaoxin district has been renovated into 25 units along with four toilets and one kitchen. Each unit of less than 10 square meters is rented out for 300 yuan monthly. The ant hostel, about a 20-minute bus ride from the local city center, is home to more than 40 people.

"Since the units were put on the lease at the end February, 24 have rented and there's only one left," the hostel's landlord was quoted as saying by the mainland media. "Most of the tenants are new graduates who have jobs."

While tenants appreciate the low accommodation cost, the queues for the limited kitchen and toilet facilities drives many to spend more away from the hostel. "To prevent time wasting, we usually dine out," one of the tenants said.

Lian Si, the Peking University scholar who wrote The Ant Tribe, estimates that about 1 million people live in "ant communities" in major cities across China, with about 100,000 in Beijing alone.

In Tangjialing village, beyond the capital's Fifth Ring Road, 3,000 villagers have been joined by another 50,000 "ants". Most make less than 2,000 yuan a month to rent a bed for about 300 yuan and need to take one to two hours to work in central Beijing.

One group hoping property prices will continue rising are divorced couples seeking to gain from the increased value of their shared property, despite the stresses that can bring. The Beijing Morning Post said that, based on cases in a Beijing court, about 10% of divorced couples in China born after 1980 prefer to maintain their financial ties and shared property.

"House prices are rising sharply, so we have decided to wait and hopefully to sell the house at a higher price," said one such divorcee, Lin, who lives with her former husband in a two-bedroom apartment in Beijing's Haidian district. They bought their home for more than 1.2 million yuan about a year ago. It is now worth three million yuan.

Note:
1. For a picture of Zhang's compartment, click here .

Olivia Chung is a senior Asia Times Online reporter.

(Copyright 2010 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)


China's middle-classes lose property hope (Apr 23, '10)

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