Some landlords will strike it rich during the Olympics
When Rindge Leaphart, an American who plans on coming to Beijing for the Olympics this August, started searching online for accommodation, he discovered the trip would be costlier than he expected for China: five-star hotel prices during the Games hovered around USD 600 per night. Olympic packages, which include tickets to two-three events and three-five nights accommodation, started at around USD 5,000. “What a rip-off,” he griped. Frustrated by the high cost, Rindge turned to the Internet to find a homestay, or private residence, for his Games trip. At USD 400 per day, the apartment is a bargain compared to a room at even a mid-range hotel.
Leapheart and his landlord are not alone. As visitors to this summer’s Olympics confront astronomical hotel prices, they are increasingly relying on temporary apartment rentals and homestays, which offer better value with often similar amenities. For Beijing residents, the growing market may prove a boon, allowing those already living in the city, especially expats, to potentially earn the equivalent of a year’s rent from just two weeks of subletting.
The head of the tourism bureau, Xiong Yumei, recently conceded that, “the guest room supply may still fall short of demand, especially for hotels close to the sports venues.”
Of the Beijingers eyeing the demand for cheaper and potentially more convenient housing, none has seized opportunity like Dutchman Piet Bos. In March 2007, Patrick de Smet, owner of The Tree restaurant, proposed that Bos set up a website to connect potential tenants and landlords. By May, Bos, who already runs a tour company through www.beijingdaytrips.com, had launched www.homestaybeijing2008.com. The site has garnered wide media attention and Bos says, hundreds of inquiries from locals and Olympic visitors.
“I’m not into real estate; I’m into business,” says Bos, explaining that he acts only as “a facilitator between those who want to rent”. Even as a middleman, the entrepreneur may be able to reap huge benefits, since he takes a 20 per cent cut on all bookings. For that fee, however, Bos offers prospective landlords high visibility on the Internet, where many visitors are likely to turn for housing information. He also vets and photographs each apartment for its website listing. Landlords are required to speak English and most are foreigners. Residences are selected based on their proximity to Olympic events, shopping, restaurants and entertainment venues, as well as the quality of their facilities.
While he’s now focusing on finding tenants, Bos says he is still looking for a few rare gems, like courtyard apartments in the center of the city and luxury villas in the Shunyi area. His proudest find is a set of 150 serviced studio apartments at a complex in Wangjing. At RMB 1,800 per night, “you get four-star hotel accommodation for a two-star price,” he claims.
For more high-end luxury, Australian lawyer Tom Luckock is offering his two renovated Bell Tower area courtyard homes through www.beijingcourtyards.com. The smaller property, which comes with its own spa, is currently being leased, but the bigger (326 sqm) four-bedroom courtyard, which has a swimming pool, may be available for rent during the Olympics.
Luckock says he is making no attempt to beat the hotel prices, only that he expects a “pretty reasonable” amount for the venue. As he points out, “[Most] hotels can’t offer the same traditional Chinese experience that a courtyard can.”
Landlords and tenants renting out their centrally located apartments through Bos’ website should expect to make at least RMB 700-1,000 per day, per guest. By going it alone, though, some enterprising individuals and real estate agents are counting on bigger dividends. One of the 40 online classified ads listed on www.thebeijinger.com, for instance, offers a one-bedroom, 100 sqm apartment near the Olympic Park for an asking price of USD 278 per day, USD 1,459 per week or USD 4,168 for a month’s stay.
Concerned about the supply of hotel rooms, the Beijing tourism bureau announced it would be getting into the homestay business itself. Last month, it began accepting applications from prospective landlords. In addition to speaking English, tourism chief Xiong said, “Families should own the apartments that they plan to offer and be able to provide foreign guests with spare rooms, good ventilation and sanitary conditions.” The city’s homestay program has been tentatively set at USD 50 to 80 per day, considerably less than the going price for a typical homestay.
That said, Bos has seen landlords go overboard in their Olympic opportunism. “I’ve had landlords who are extremely greedy, but I’m more interested in [people charging] EUR 100 per person per night,” he says. “The higher the landlord charges, the more money I earn. I’m the lucky one. But as I see it now, there’s zero interest in the high-priced apartments.”
As Beijingers contemplate how best to benefit from Olympics mania, visitors like Leapheart are still feeling the pinch. His homestay apartment will also cost USD 400 per day for his two-week visit.
However, there are obstacles on the road to easy money. Expat renters, for instance, may encounter problems with their landlords. “There’s some kind of law where it’s not illegal to sublet, but in most contracts it says you can’t, so there’s a risk,” says Bos.
Another challenge for potential Olympic landlords and subletters is actually finding visitors willing to rent. While some visitors have already booked their seats at the Games, some say the convoluted ticket purchasing system has deterred them. “The lottery system here in the US, like many other countries, was overwhelmed with ticket requests,” says Leaphart, who only has three event tickets and is waiting for live ticket sales.
Although Bos believes his website has “enormous potential”, business has not taken off as fast as expected. For this he blames the Olympic lottery. “If potential visitors can’t get tickets, they won’t start to think about accommodation,” he says. But with half a million visitors expected come August, he’s confident that potential landlords need only wait. He’s even readying another homestay website, www.zhuzaibeijing.com, that will be in Chinese to cater to domestic visitors. “I’m waiting to see if I can pull this off,” he says, “and by the way, things look like I am pulling it off.”
Less clear are the effects the temporary Olympic housing market will have on the city’s already heated real estate sector. Rent has been steadily increasing in China’s capital, with a growing shortage of low-cost housing.
Historically, the impact of hosting the Olympics has varied from city to city, says Anna Kalifa, head of research for Jones Lang LaSalle. In Barcelona, for instance, the 1992 Olympics were considered a major contributor to increases in residential values of between 250 and 300 per cent over the period 1986-1993. On the other hand, the Games had little effect on real estate in Atlanta and Sydney. Moreover, Beijing’s increased housing prices are not necessarily directly connected to the Games, but to general economic growth, says Kalifa.
“Landlords are already expecting a 15-20 per cent increase for prime properties specifically during August. On the whole,” she says, “this is a short-term phenomenon, and should resolve itself after the Games end.”
Bos doesn’t plan to stick around to find out. The homestay entrepreneur has decided to follow the money to London, the host of the 2012 Olympics. He has already purchased the website www.homestaylondon2012.com. “There will be much more competition in London,” he notes.
When the Olympics arrive in Beijing, Bos says many landlords hoping to rent are also planning to jump ship and head for calmer shores, like Thailand, Europe and Japan. Will Bos then abandon his Douban Hutong studio for those two weeks? “No way,” he says. “This is something that I’ll never get a chance to see again.”
[original article at Urbanatomy]