And Finally

The right address

Why a coffin-sized Beijing residence is pricier than Manhattan real estate


The face of old Beijing: a typical hutong in the Chinese capital

A “studio nestling in the historic alleyways of central Beijing”, might be how a Western estate agent would describe a recent listing at 121 Lanman Hutong.

By contrast, Alibaba’s auction site described it as an old, one-bedroom, no-bathroom, no-kitchen unit measuring just over five square metres, or roughly half the size of a carparking lot.

“The sale of this property has been mandated by the Peoples Court of Xicheng district,” the website said.

It went on to warn that the tiny property was occupied, and that it would take longer than usual to transfer the property rights because it was being sold as a result of a legal dispute.

Nevertheless after rounds of intense bidding by 29 interested parties, the tiny, decrepit property went under the hammer for Rmb1.3 million ($184,891), making it 70% more expensive per square metre than most property in Manhattan.

The question on everyone’s lips was: why?

One theory is that it was bought as a “school apartment” – a property for the sole purpose of acquiring an address in the catchment area of a good school. WiC has written about this before (see issue 236): it used to be that parents could buy their way into a good state-run school by purchasing something of value for it (a new fleet of mini-buses; or replacing all the air conditioners). But after Xi Jinping came to power this loophole closed.

Now the only solution is to “live” in the area: causing house prices near good primary and middle schools to surge.

Getting into a good high school usually means starting at the better primary and middle schools, which act as feeders. “You have to win at the starting line” is a phrase you often hear when it comes to education in China.

Lanman Hutong is within the catchment areas of two reasonably well-rated schools. Properties closer to excellent schools have actually sold for more per square metre.

Yet for the ruse to work a parent would have to be thinking long term, as officials from Beijing’s Xicheng district say a property can only be used to register for a school place once in every six years – to prevent multiple families using the same apartment to get a foothold in the system.

Another theory is that the “little broken house” was bought as a so- called “demolition investment”.

Photos indicate it forms one small room of a courtyard house. Historically such courtyards were occupied by one extended family. But after the Communists came to power they were divided up and ownership was reallocated.

In recent years, wealthy Chinese have reunified some of the courtyards by buying out all the owners, but more commonly the government moves in to redevelop the area.

Lanman Hutong’s name means “brightly coloured” or “blossoming” and the alley sits just behind Beijing’s thousand-year-old Niujie mosque.

The neighbouring areas have also been home to some of China’s most famous writers and thinkers, including Kang Youwei (see WiC458).

“The house is definitely not worth the price, it’s mainly the location,” wrote one netizen on Sina Weibo. “If the price of the house does not fall, after the child finishes school they can resell it, so this won’t lead to a loss for buying it and it gets them into a school nearby. It’s cost-effective. Anyway, nobody is gonna want to live here,” added another.

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