BEIJING — A subdivided home in a run-down alley in Beijing recently sold for a record price at auction, as eager buyers piled in to get hold of its much sought-after address to gain access to some of the Chinese capital’s best schools.

A subdivided unit at No 121 Lanman Hutong, about 10 minutes’ drive from Tiananmen Square and the Forbidden City, changed hands on Nov 11 for 1.28 million yuan (S$248,000) after 136 rounds of furious bidding during an auction in Beijing.

For 230,000 yuan per square metre, the new owner bought a 5.6-square metre (72 square feet) cubicle covered in bathroom tiles large enough to fit a bunk bed, with standing room only. That’s smaller than even Hong Kong’s notorious micro-apartments – also known derisively as shoebox flats or nano flats – which average about 200 square feet. A standard car parking space measures 126 square feet.

What the dilapidated space does have is an address that entitles its owner to a hukou, the household registration that is the prerequisite for access to schools, homes, civil service jobs, public health care and almost every aspect of daily life in the Chinese capital.

Lanman Hutong, or the Alley of the Brilliant Drapes, sits in Xicheng district, a chequerboard neighbourhood criss-crossed with hundreds of alleyways that boasts three of the five highest-ranked schools in the city.

According to Beijing’s real estate regulations, one square metre entitles the owner a hukou. That fuelled the rush by parents to buy property in the area to qualify for sending their children to such eminent schools as the Beijing No. 4 High School, whose alumni include former Chongqing Commissar Bo Xilai, former China Development Bank president Chen Yuan and Citic’s chairman Kong Dan.

Most of these bolt holes are now unoccupied after they have served their purposes, local residents said.

The auction result offers a peek into the growing speculative bubble in Beijing’s property market, a development that has defied more than two years of policymakers’ attempts to control. The average price of newly built homes rose 4.3 per cent in October to 60,894 yuan per square metre in Beijing, according to China’s statistics bureau data and Lianjia, a major real estate broker.

“Beijing’s homes have always been expensive, (particularly so) in Xicheng, where only the ultra-wealthy can afford to stay,” said Midland Beijing’s analyst Zhao Jia. “A million yuan is not expensive at all, to find space that close to the Forbidden City.”

Beijing’s average home price is equivalent to 24.9 years of the city’s median net income, excluding expenditures, according to data by E-House China Research and Development Institution.

Hong Kong, the world’s most expensive urban centre to live and work in, requires 21 years of average income to affordable the average abode, according to the Demographia International Housing Affordability Study, as the city also boasts of a higher income and lower tax rate.

“It is not that easy for the average person to own property in Beijing,” said Midland’s Zhao. “For most homes in the city, 1 million yuan is only enough for a down payment.”

Unit 121 on Lanman Hutong is located among a cluster of siheyuan, as Beijing’s traditional courtyard homes are called. Bicycles, old washing machines and other household junk are piled along the maze of alleyways leading to the ground-floor unit.

Its auction drew 29 bidders starting from 470,000 yuan. The final winning bid prices the Lanman cubicle 35 per cent higher than a 100-million yuan villa with view of the Summer Palace in Beijing’s outskirts, on a per square foot basis.

To be sure, the unidentified buyer of the unit may be speculating for a quick flip, when the property is torn down, said Mr Zhang Dawei, an analyst at Centaline Property Agency.

“This is more like a gamble, betting on the unit being demolished,” Zhang said. “If the odds are good, the buyer can pocket the [compensation], which could be several times what he bought it for. Even if it is not demolished in the short term, it is not bad to have some asset in the heart of Beijing.” SOUTH CHINA MORNING POST