Wait 100 Years to Turn a Profit on a Xiamen Rental

The first column after the city name is its tier, then rental yield and payback in years. Xiamen tops out at a 1 percent yield, or 100 year return of capital. You might think that's overstating things a bit, but it's also a gross yield and doesn't include maintenance, taxes and other costs. Most of the yields are also far below mortgage interest rates, as much as 50 percent below. Unless investors are paying cash, many properties won't have a positive cash flow (ignoring inflation and price rises) for far longer than forecast.

The table highlights how Chinese home valuations are based almost purely on expected price appreciation. If forced to hold and rent, if the market tops out like Japan or the United States and enters a multi-year or multi-decade decline, returns will fall through the floor. For comparison, here's a 2016 list of Top 20 Cities In U.S. For Investing In Real Estate Rentals from Forbes. Most of the cities have yields around 5 percent, including Austin, TX. It is not a list of the cheapest bargains, rather its cities with good yields and good fundamentals such as population growth and job growth.

This table compares foreign and Chinese city rental yields. On the left is the city's international grade. NY and London are A, Toronto and LA A, Orlando is C-, New Castle and New Orleans at the bottom. Comparable Chinese cities are on the right.

Caijing: 中国租金回报率地图:厦门回本要100年 一线城市都哭了

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