As housing costs take a growing bite out of Beijing residents' earnings, more expats are compromising on the location and size of their apartments to better fit their budgets. Photo: IC

 

Yvonne Baldle-Agboton made the decision to find a new apartment a couple of weeks ago, after her landlord proposed a rent increase.  

"'I want 2,000 yuan ($309) more,' the landlord just came and said without any explanation," said Baldle-Agboton, who comes from Germany and lives with her husband and child in Beijing. "And we felt like, 'What? We did all the renovations to the house ourselves and paid for everything and you did nothing. Why do you want more money?'"

Baldle-Agboton is not alone in her frustration; for years, tenants across the city have been griping about Beijing's rising rents. The problem isn't just due to money-hungry landlords, however. In late April, the Global Cities Business Alliance, a UK-based nonprofit, named Beijing the world's least affordable city to rent in, with rent costs reaching a staggering 1.2 times the average monthly salary. Abu Dhabi and Hong Kong ranked second and third in the survey of 15 major cities worldwide.

Despite the fact that foreigners in Beijing have higher average salaries than locals, climbing housing costs still take a significant bite out of their earnings, so much so that it's become a key factor affecting expats' quality of life - not to mention a determinant as to whether they decide to stay in Beijing, or to leave for greener pastures.

Downsizing apartments

According to the latest data on Expatistan, a website that calculates the cost of living in different locales around the world, the monthly rent for an 85-square-meter apartment in Beijing's most expensive neighborhood is around 11,065 yuan, while it averages 6,826 yuan in other areas in the city.

And those figures are continuing to rise. Data from the China Real Estate Association shows that the rents in Beijing rose 12.95 percent year-on-year in 2015, according to a report in March on cnr.com, the news portal of China National Radio.

"I need to say that I have been in Beijing for five years, and I think the rent has risen every year," said Baldle-Agboton, who founded Phoenyx HealthLife Coaching.

When she first came to Beijing in 2011, she lived in a 160-square-meter apartment in Sanlitun SOHO, which cost her 18,000 yuan per month. At the time, the rent was covered by her former employer, a Chinese company. Baldle-Agboton quit her job after getting pregnant and moved to an expat community near Chaoyang Park, where she paid 12,000 yuan for a 120-square-meter, two-bedroom home. Just a year later, though, the landlord demanded higher rent.

As rents in Beijing continue rising, more foreigners are moving to smaller, less central apartments. Photo: IC

Dealing with price hikes

According to Mareike Mueller, vice general manager of Joanna Rental Estate, a Beijing-based company that caters mostly to expats, the areas that her clients are most interested in are Sanlitun, the CBD, Dongzhimen and Lufthansa. 

"Families with kids studying at international schools prefer to stay in the villa areas close to Jingshun Road or close to ISB (International School of Beijing)," she added.

Foreigners with good expat packages are less affected by rising rents.

"For many of them, their company pays the rent," said Mueller. However, she added, they're not totally exempt. "They [also] have to make compromises because of rising prices. They have to think about different locations, smaller sizes, lower floors, etc. to fit their budgets."

Since leaving her former employer, Baldle-Agboton has had to pay rent on her own. She initially went to a local real estate agent who didn't speak English, because she thought a local agent could offer her apartments with lower prices.

"Or you can go to the property management office, which may also have houses for rent to avoid intermediary fees," she said, adding that moving to local communities is another way to save money.

"An increasing number of foreigners speak good Chinese, and they are more willing to live in Chinese communities with Chinese neighbors."

Moving further and further afield

Sammy Tan, who works for a Malaysian media company, is another foreign resident who's recently been struggling with rising rents in Beijing.

For the last year, she's been living in an apartment in Shuangjing with a monthly rent of 11,000 yuan. The lease is due to end in June, and just the other day, her landlord told her they wanted to raise the rent to 15,000 yuan.

"That is quite an aggressive hike," complained Tan. "It is not appropriate to have such a high and drastic hike."

Tan said when looking for apartments in Beijing, she takes safety, proximity to public transport and the quality of the neighborhood into consideration. Although she thinks the Shuangjing area isn't bad, the prices have become too expensive.

"China's booming economy has drawn in more business, however [some] house owners are taking advantage of it," she said. "The hikes are drastic, but foreigners have no choice."

One solution that Tan is considering is moving to a more far-out neighborhood. "I may move further away from the downtown, like the Fourth or Fifth Ring Road. I don't see a problem because the transportation is efficient in Beijing."

As for Baldle-Agboton, after several weeks of house-hunting, she finally settled on an apartment nearby her previous compound that's 100 square meters and costs 10,000 yuan per month. But she was chagrined to discover after signing the lease that a similar-sized apartment in her previous compound was available for just 8,000 yuan. "The owner is a foreigner, a Japanese person who said as long as you take care of the apartment, the money is fine."

Part of the problem for foreigners like Baldle-Agboton is that it's fairly common in Beijing for Chinese landlords to charge foreign tenants more than Chinese tenants. "It's not really fair," Mueller mused. "But as long as there are so many people who are willing to pay these prices and sometimes fight for apartments, landlords can ask for higher prices. This is how the market works."

Baldle-Agboton agrees that it isn't fair, but added that expats and the companies they work for are often part of the problem. "The companies always say, OK we pay the rent whatever the rent is. Of course the owner is like, 'Oh, I can get more money from the company,' so the rent goes up and up."

Policies to combat rising rents

Baldle-Agboton suggests that the local government consider measures to head off Beijing's out-of-control rent hikes.

"Because in Berlin, where I come from in Germany, the government said no to [uncontrolled] rises in rent. We have a three-year clock, which means that rent can't increase any more than 15 percent over a three-year period," she explained. "If you want to raise the rent, you have to wait another three years."

In the China National Radio report, Yang Hongxue, the vice director of the Shanghai-based E-house China R&D Institute, a leading property consultant firm, said that at present China still lacks policies to regulate rents, especially in terms of protecting the rights of tenants.

"China has put a lot of emphasis on new housing development and the sale of new apartments over the past decade, but it's focused less on the housing rental market," said Yang. "However, China should pay more attention to the rental market because only when the buying and the rental markets develop side by side will the real estate market be headed in the right direction."

In February, the Beijing municipal government implemented a policy that allows foreigners with work permits in Beijing to buy an apartment in the city.

"I think it is a good decision but not so many will use it," said Mueller. "Every decision that makes the market more open is a good one."

Baldle-Agboton said that last year, she thought about buying a property in China because her rent was too high, but after serious consideration, she ended up buying an apartment in Berlin instead. 

"Because I may leave China in one or two years," she said. "Expats used to have big apartments [in China], but these days they're getting smaller, smaller and smaller."