A threat to old Beijing

In a dank alleyway in the old quarter of Beijing is a half-renovated house with a gaping hole where the roof should be. It has no garden or pool and had, until recently, only a few modern amenities.

But this traditional courtyard home has just been sold for 110 million yuan (about $14.2 million, or £7.1 million) — thought to be a record for a residential property in Beijing. It is the latest sign of rising incomes, changing tastes and growing inequality as the capital undergoes a pre-Olympic housing boom that puts even London in the shade.

Despite government measures to cool growth, the Beijing housing sector has never been hotter. According to the local media, average prices in the city increased by almost 10% in February. Estate agents claim that many luxury homes have doubled in value in three years.

Until a few years ago, most speculators focused on modern apartments in inner-city tower blocks and new villas in the suburbs. But the record-breaking home is an old-style siheyuan (courtyard) in the downtown houhai (“back sea”) area of the city.

Walled quadrangle residences were popular with the nobility and courtiers, but after the communist revolution of 1949, many were requisitioned and partitioned for families loyal to the new government. Often overcrowded and notorious for their smelly communal toilets and unsafe coal-fired boilers, many of these old neighbourhoods have been treated as slums by the authorities. In the race to modernise in time for next year’s Olympics, tens of thousands of homes have been demolished in the city’s old hutong alleyways.

In the central area, only 3,000 courtyards remain, giving them a rarity value that has pushed up prices. The one just sold was particularly valuable because it is a huge property, ideal for modernisation, and close to the city’s liveliest lakeside entertainment district.

Each of its 3,028 square metres sold for more than 36,000 yuan (over $4,600, or £2,300), more than double the price previously fetched by any home in the neighbourhood. The buyer remains anonymous, though local media have speculated that he is a coal-mine owner from Shaanxi province or a Russian billionaire.

The new owner will be in mixed company. While many Beijing siheyuan are still occupied by working-class families, others have been snapped up by wealthy foreigners, senior officials, contemporary artists and the new rich. Two years ago, media tycoon Rupert Murdoch reportedly was pressed into buying one for 30m yuan by his wife, Wendi Deng.

Such purchases can be risky in a city where planners often requisition land for development. Last October, Beijing’s first courtyard auction was cancelled after an hour because wary bidders failed to meet even the reserve price of $225,000 (£113,000). But the passage of the nation’s first property law this year and state protection orders for hundreds of courtyards appear to have strengthened the market.

“The reason courtyards were not that popular before is because people did not appreciate their value and potential for investment,” said Hu Chaohui, manager of a real-estate company. “But they are very special. They are rare and centrally located. In addition, their prices not only include the usage value but also the historical and cultural value.”

Critics say, however, that “conservation” often means knocking down an old building and replacing it with a structure in a traditional style. “The way now is to build fake old. It is not nice,” said Ma Yansong, an architect. “The hutongs attract many tourists. The poor, old residents are either like actors in a theme park or else they are kicked out so the rich can buy up the properties. The old community spirit is being lost.”