Every working Chinese professional I meet these days has this one question for me. What is the cost of an apartment in Mumbai and Delhi?
The first question is popped within moments of settling down to the meeting. What is the cost of a 100 sq m flat in Delhi? Okay, then Mumbai? And 125 sq m? Two bedrooms? How many floors are there in Mumbai buildings? Okay tell me the cost in US dollars. Yuan?
NYT estimated this month that Chinese home prices surged 140 per cent since 2007 and almost 800 per cent in Beijing over the last eight years. An HT report estimates that average housing prices rose by 30-50 per cent in Mumbai and Delhi.
During the financial crisis, Chinese parents went on apartment shopping tours to buy homes for their children studying in New York, London and Los Angeles. Now as Beijing struggles to rein in nationwide property prices, the Chinese middle-class is getting genuinely curious whether India is handling housing price controls better than China. I would hazard a personal guess that India’s doing better, simply because of the extreme stories of house hoarding and shopping I hear in China even when prices are high.
Last October we heard that Shanghai couples were buying fake divorce certificates to be eligible to own a second new apartment.
My friends in India and China are constantly talking about the rising cost of living. But the Chinese I meet also talk about major spending. When I travel to cities caught up in what seems like the world’s biggest building boom, I meet people in their twenties and early thirties with fixed salaries who inevitably discuss their latest designer purchase from a genuine store instead of the fake bags and coats I see worn on the streets of Beijing. In these fast-growing cities in east and south China, I hear young professionals joke about investing their savings in a scruffy apartment in a building bound to go under the bulldozer to make way for a glass and steel mall in a few years. And when that happens, they imagine walking away as one-million-yuan millionaires.
“When Liu Jinshan signed on the dotted line to hand over his home and land to the government last July, the compensation deal made him a multi-millionaire overnight,” reported the China Daily last June. “With 2.4 million yuan ($350,000) in the bank, the 67-year-old farmer immediately splashed out on a car, two apartments and a shop in a new residential area in his native Harbin.”
When I travelled this month to the heart of China’s housing price crisis – the southernmost Hainan province – I expected to run into a struggling middle-class and newly weds unable to afford an apartment. It so happened that the first young professional I met cheerfully said that he had bought one, and then a second apartment, around the peak when Hainan hit global headlines with one of the world’s fastest housing price rise. He was working his way through 30-year bank loans. “Some people own five apartments,” he added coolly, enjoying my stunned expression.
I spoke to a girl who had also bought her own apartment in Haikou, Hainan’s capital. “My friends are envious that I bought my house just before the price rise,” she said. “We stand on the streets and see apartments in darkness. But when we inquire, they tell us the apartments are sold to outsiders with more cash, who drive up the local property prices.”
Beijing declared in December 2009 that this sleepy Goa-like state would be transformed into an international tourism destination by 2020. The announcement sent property prices soaring. In one of Hainan’s two cities – Sanya – the only construction projects I saw and heard of during three days were oversize luxury hotels, high-end apartments and beachfront villas. The island has only half a million people. On long drives on the empty highway, my taxi would pass five-star resort after resort but no traffic. A local resident gave me an explanation. “The one place you will see a large crowd of people is in the real estate office selling Spanish-style villas by the bay.”