Property journalism ~ Boom time for Beijing
Daily Mail, 18 August 2006
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Ever thought about investing in a Chinese shop? In China? It's a far cry from the dilapidated gite in Bordeaux or the retirement villa in Spain, but it could be where the smart money is.
London dentist Anoop Maini and his wife Neera have just bought a shop in Beijing - and they may not even go there to check out the electrics and the plumbing.
That's nothing to do with the distance or expense - you can get return flights for under £400. It's thanks to a buying package that does all the tricks for them.
After dismissing the UK 'because the returns were too low', the couple surfed the net and checked out properties in Bulgaria, Dubai and finally China.
It was there that they stumbled on a shop for sale with a 10 per cent annual rent yield guaranteed for 10 years.
What really surprised them was how easy it was to get a mortgage in a place once riddled with forbidden territories and no-go areas.
'We were really taken aback to discover branches of the big banks like HSBC and the Bank of East Asia offering investment loans of up to 70 per cent with interest rates of 6.5 per cent,' says Maini, 35, a father-of-two.
'We took out a 15-year mortgage, though the 10 per cent rental income we get means we can pay it off in seven years.'
The couple also found they could download their buying agreement from a website.
'Property contracts are on the net for the whole world to see as well as being refreshingly short, simple and written in the clearest English,' Maini says. 'The real beauty of the whole deal was that we didn'y need to use a solicitor. We just signed the contract and sent it by post.'
The Mainis' Oriental adventure was cheap as well as easy. Chinese stamp duty was 0.05 per cent of the property's price - a token gesture compared to the UK - and their title deeds cost 3 per cent.
As they are buying into a development, another 2 per cent goes on a communal fund set aside for maintenance and they will pay 5 per cent tax on their rental income.
Of course, China still has a long way to go before it can meet the Western definition of an open and free society. It has only recently allowed investors from Europe, the USA, Australia and Canada to buy local properties.
But it has made up for lost time with a vengeance - revising some of its more archaic property laws (such as the Chinese government's habit of seizing people's homes without notice).
The Mainis' £130,000 shop couldn't be more secure. It has a 50-year lease and is part of a new-build cultural tower of shops, fitness clubs, restaurants, banks and offices being sold by UK agents Colliers CRE.
Investor John Hardeep, who bought a travel agency in Beijing, says: 'Paying under £200,000 and getting 10-15 per cent capital growth makes so much more sense than sitting in a £1 million four-bedroom house in the UK and getting virtually no movement at all.'
The commercial kudos of the 2008 Beijing Olympics has not been lost on developers, either. 'The city is starting to look like a giant construction site, with almost every spare piece of land being used for development,' says Colliers' sales manager Yiming Yan. 'Plus there's a brand new underground rail network, revised road systems and improved infrastructure.'
Maini says: 'Though we don't yet know what products our shop will be selling, we'll be watching this space. If it works out well, we may sell it when our loan's paid off and buy a few more.'
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