I can only speak for myself and my situation. After buying two houses and two commercial properties in China, I consider myself one of the lucky ones. I have not been ripped off or lied to (…yet), but I would say:
Do not by any property that is not built yet.
I did, and while the house was constructed without any major problems, I had an advantage. Specifically, we have a family friend who owns the real estate company, therefore, small problems we encountered were easily fixed. I assume most expatriates do not have this luxury.
This GoKunming.com interview sums it up quite well.
One, don’t invest in forward delivery housing – buying property before it’s finished or even begun to be built – the price may be a little cheaper, but the risk is much higher.
Why? Because you could end up with a house you cannot live in — you could lose your entire investment. Just last night, I watched a CCTV story about some Chinese families who bought into a new development and once the keys were delivered, they opened the door to their new house to see two inches of water flooding the living room, and the cement floor crumbled if you walked over it. They said no one will help them. (Where is the government agency to protect homeowners? Why do they have to resort to calling a television station to put pressure on these fraudulent companies?)
In our experience, we quickly realized all the windows needed to be replaced because they were constructed poorly. No one wanted to help and everyone started finger-pointing. Luckily, labor is cheap in China and it only cost us a few hundred US dollars to fix.
Two, make sure the area surrounding the property you’re considering has all the amenities and infrastructure you’re looking for.
We bought into the most affluent community in Chuxiong, Yunnan, called Yi Ren Gu Zhen (????, or YRGZ). Not having nearby stores is not a big problem as the community is only a mile away from civilization — but the 16-hour-a-day “Yizu” music that blares throughout the community “PA rock system” is incredibly obnoxious, playing the same tribe music, all day, every day.
Three, make sure you invest in a property that is managed by a reputable company.
This is, by far, the most important research you should do before handing over any money. And how do you check on which company is reputable? In our case, our company is reputable but the experience is still lacking.
For example, our “wu guan” (??), or property management office/team is a joke. I think it is to be expected, though, because YRGZ probably contracted out the cheapest management company available, along with a bunch of teenagers for our security patrol. The result is insubordinate behavior, lack of professionalism, and for us, no response or action to any comments or questions (and lots and lots of finger pointing). I am guessing this will be fixed within the next five years.
The bottom line is this — there are many properties that are already built in China. Go that route. You can ask the current tenants how the experience is, you inspect the quality of the property, you can talk to the property management company, and you can see the surrounding areas, the list goes on.
Yes, the value of our house went up by about 10% (but, who’s to say that is accurate?) because we bought it before the construction started — but the problems and annoyances we encountered (and continue to encounter) because it is a new development outweigh any monetary gains we may have achieved.
In retrospect, I would buy a flat in downtown Kunming, right next to that big ass mall and call it day.