Zhang Ge, Beijing, has been in the real estate industry for 20 years and is familiar with the industry. I am not a so-called “expert”. I only use 20 years of practical experience to help you answer your questions.
Brother Zhang, when I graduated, my parents bought a one-bedroom apartment in Baihe Bay. I didn’t live in Zhongguancun, and I kept renting it out. A few days ago, I suddenly discovered that the rental yield here is super low, only 1%. The international practice is 4-5%, is this sales ratio far below the economic law? Yesterday, I told the intermediary about my discovery, and they were also surprised and persuaded me to sell the high-end plate. So I thought, should I buy it now and cash out? I didn’t think about the right time, so I came to consult.
1. How can I say this, I don’t even know how to speak. Let’s take a quote from Guo Degang: This kind of unseen appearance is very demeanor when I was young.
When I first entered the industry, I accidentally found out that a competitor was playing the empty glove white wolf, so I secretly reported to the boss at the meeting: their start-up capital was only more than 10 million, and they wanted to leverage more than two billion projects, and they would definitely fail. . The boss looked at me coldly and ignored me.
Later, a colleague told me that the building where the company is located is worth 100 million yuan, but the boss’s start-up capital is only 800,000 yuan. How do you say this? It is capital that is engaged in real estate, and it is normal to have empty gloves.
2. What’s wrong with the low rent in Lily Bay? It’s not high in Tongzhou, and it’s not high in Beijing, even in first- and second-tier cities. This is not a secret at all, let alone news. At most it is an “elephant in the room”, everyone knows in his heart, pretending to be invisible.
International practice is of course 4-5%, but apart from Europe and the United States, few countries or cities can do it. It is said that Japan has a high rate of return, and a lot of Chinese investment funds are used to speculate in real estate. In fact, it is not high at all, and it is not as good as Beijing after all.
The city lower than Beijing is Shenzhen, and the closest is Hong Kong. Seoul, South Korea is much lower than Beijing, and the house speculation there is even more fierce than Shenzhen.
3. In fact, there is no international practice saying that the rate of return is 4-5%. It is all fooled by some Chinese experts. However, it is correct that the prevailing rate of return should be basically equal to the real interest rate of the bank, and its theoretical basis is “reversion to the mean”, or return to zero. That is, no matter which industry or product, the final long-term rate of return is the same until there is no money to make. The bank interest rate represents the average market return, so the rent income should be similar to the interest rate.
However, the yield ratio is generally not used for comparison, and the rent-to-sale ratio is also used, which is equivalent to the price-earnings ratio in the stock market. Represents people’s long-term expectations of investment products. I feel that the stock will rise in the future, and the price-earnings ratio will be high. When applied to the property market, it is the rent-to-sale ratio. People feel that housing prices will continue to rise, so they would rather sacrifice short-term rents in exchange for appreciation, a nature.
4. Beijing’s rent-to-sale ratio was not high before 2009, always around 2/300, but at that time, many people still called high prices. Now it is higher, and the transaction volume of the house is greater. Explain what? It shows that most people do not believe that Beijing’s house prices will fall sharply in the future, including me.
However, I don’t think Beijing’s housing prices can go up so much, at least not. This is also based on the rent-to-sale ratio. 700 is already a very high position. If both the increase and the rent are taken into account, it does far exceed the real interest rate. But I don’t think there is much risk, and the comparison has not yet completely deviated from it.
5. I won’t say much about it, I don’t understand it in tens of thousands of words. In a word, although the rental yield of Lily Bay is low, it is not a special case, it is all like this. After all, Tongzhou is a suburb, and the rents in Beijing’s suburbs are not high. The school districts in the Canal sector are good, and it is normal for some school districts to have premiums, which has further pushed up the rent-to-sale ratio and lowered the rate of return.
As for the risk, Baihe Bay is not high in Tongzhou and Beijing, and it is normal. In fact, there is nothing the intermediary doesn’t understand. People do the business of selling and renting houses every day, so fools can’t settle accounts. The reason for the surprise is to pretend that you are just selling a house, and they have an extra house.
6. In short, whether to sell a house for cash is up to my own judgment. I don’t think it is necessary. Beijing does have a high rent-to-sale ratio, but it is not dangerous. I can’t say the future trend of Beijing’s property market. I can only say that the higher the P/E ratio in the stock market, the more popular it is, and therefore the price will be pushed up. Commodity prices are determined by the relationship between supply and demand. for reference only.
Reprint indicated source：Spark Global Limited information