Are you a city slicker or a country gent? Beijing has luxury properties suitable for both. One of the biggest obvious advantages of the Soho development is its position near the heart of the fast-growing business district.

You can't open a newspaper these days without the face of ultra-trendy Beijing developers Zhang Xin or her husband and partner Pan Shiyi smiling out at you.

They have both their vociferous critics and staunch fans, but whichever side of the fence you fall on, it is undeniable that their SOHO home-office model and their daring approach to architecture has made a major impact on Beijing's luxury housing market and on lifestyles in the city.

"Experiment is the character of China today - from the economic system to the political system to the way of living, the way of doing business, everything is happening for the first time, " says Zhang Xin, a Beijing native who grew up in Hong Kong and London.

She has a master's degree in development economics from Cambridge and has worked for Goldman Sachs and Travellers Group, while he was one of the first private-sector property developers working in China. A match made in real-estate heaven.

SOHO stands for Small Office, Home Office and it has introduced to Beijing the notion of work and living areas existing in harmony.

Ms. Zhang is a busy woman. She and Mr Pan built SOHO New Town in 1998, a colourful, mould-breaking development, and recently completed Jianwan SOHO, which is like a self-contained city in the heart of the central business district.

Jianwai SOHO has generated sales of around seven billion yuan (HK$6.6 billion) so far. Ms Zhang has also commissioned top Australian architect Peter Davidson to build a new project called SOHO Shang Du. And she recently gave British-born Iraqi architect Zaha Hadid a million square meters to creat a futuristic swarm of residential blocks, although construction has been put on hold because of re-planning in the area.

Speaking in the group's headquarters in a newly built cluster of white towers with lots of glass in the central business district, Ms Zhang says Beijing is on a developmental fast track.. "The top avant-garde architects are working in Beijing and their work will represent a different quality of city outlook." She says.

Around three-quarters of SOHO residents ar Chinese, with most of them under 35 years of age and a high percentage educated overseas.

The SOHO message seems to be getting across. Judy Gao, from the company's corporate communications department, says: "All of our apartments have been sold out, even those still under construction. The buyers are almost all Chinese, especially the younger generation who have a successful career and entrepreneurs."

In a recent article in the International Herald Tribune, Michael Li, executive director of Regal Lloyds International Real estate Consultants in Beijing, said SOHO had transformed the Chinese attitude towards property. "SOHO China tells Chinese people that a house can be a kind of asset," he said. This "will have an immense effect on the Chinese real estate market, especially at a time when the Chinese government is gradually accepting private property."

The Long Game

Beijing's housing market has firm foundations - just don't expect to speculate to accumulate


The Soho development in downtown Beijing stands as an example of how quickly the market is evolving with young entrepreneurs flocking to the combination of residential, retail and office space.

"In Shanghai you have an enormous amount of demand from abroad. In Beijing you have a little bit of demand from outside entrepreneurs, but nowhere near the kind of intensity in price increases that you get in Shanghai."

DRAWN LIKE BEES TO A BAUHINIA, where there is property, there will usually be speculators. Yet as Beijing's housing market has burgeoned, there has been little of the same frenzy of short-term buying and selling as is being seen elsewhere in the country.

This is due mainly to the government's determination to stop the economy from overheating, which has resulted in a recent clampdown on credit and a tightening of land transfer procedures. The thinking behind much of this is aimed not so much at stopping people from purchasing property, but at preventing families getting out of their depth when borrowing money and effectively speculating with the bank's cash.

October's interest rate rise - the People's Bank of China raised the benchmark rate for the first time in nine years to 5.58 per cent from 5.31 per cent - was expected to reduce lending fro mortgages but a massive slowdown was not anticipated. Loan amounts were also capped recently in Beijing. A maximum of five million yuan (HK$4.7 million) now applies for a single individual. Previously a give million yuan mortgage applied for each transaction.

The government's policies are expected to effectively reduce speculative activity but not massively affect home-buying for those wanting to live n their purchases.

Dick Kwan, managing director for China of ING Real Estate, believes the government's action will not play as great a role in Beijing's property market where quality rather than the kind of red-hot speculation seen in Shanghai, remains the defining factor. "In Shanghai you see real speculation. People queuing up," says Kwan. "As a developer ourselves, we still see a good market for good properties in good locations. All the good products on offer are getting a good response - our own project, Richmond Park, is doing well.

"Some properties don't have such a good result, but often you find there are problems with the product."

Mr Kwan is frank in saying that he "wouldn't necessarily advise anyone" to buy for a pure investment. "It's a stable market, but you don't get a quick turnaround on your money and there could be better property investments elsewhere."

Economist Arthur Kroeber, editor of the China Economic Quarterly, says it is really a tale of two cities. "The dynamic in Beijing is different," he says. "In Shanghai you have an enormous amount of demand from abroad, basically from overseas Chinese, as well as from other cities in China. In Beijing, you have a little bit of demand from outside entrepreneurs, but nowhere near the kind of intensity in price increases that you get in Shanghai."

A look at the country's real estate index for the third quarter of this year bears this out. The national average in price rises was 9.9 per cent, but in Beijing property prices went u just 3.5 per cent, compared to a runaway 14.9 per cent in Shanghai.

Another reason for this is, quite simply, that developers tend to toe the line better in the capital, where they are right under the noses of the central government.

Mr. Kwan reckons that while Beijing is a less spectacular market than Shanghai, it's also a more solid proposition. "The property market in Beijing is quite stable. I don't see a lot of speculation here and the secondary market is underdeveloped. Local developers don't encourage speculation; it's not like Shanghai. It's not as sophisticated as Hong Kong and some things like having a name changed on a deed are difficult. It's a market for people buying to live in their home - there are investment buyers, but they tend to be long-term."

In October, china's Real Estate Academy announced China's 10 most expensive villas, which featured five in Beijing and two in Shanghai, while Wuhan, Guangzhou and Shenzhen all had one each. Somewhat predictably, the two mansions in Shanghai are the most expensive among the ten, with Sunville selling at 130 million yuan (HK$122 million) nearly 100 million yuan (HK$94 million) more than Beijing's most expensive, the Green Sea Manor.

Lawrence Wood, chairman of the China Property Development Fund, which is building Richmond Park with ING, said his group was taking steps to ensure stable investment and deter speculation. "We don't want to encourage speculators so we've introduces measures like restricting the changing of names on the deeds. When you sign the initial agreement, you need to arrange a mortgage with the bank. Between the signing of the mortgage and moving in, you can't change the name.

"There is no second hand market before the property is complete. We control supply. If you price too high, the demand will disappear."