Luxury home rental prices in Beijing are expected to climb 5-10 percent per year during 2006 and 2008 thanks to more expatriates moving to the city and the 2008 Olympic Games.

This rental market covers hotel-serviced apartments, as well as high-end apartments and villas, mainly targeting foreigners and Chinese people working for large multinational companies, Thursday's China Daily quoted a report as saying.

The report was released Wednesday by Jones Lang Lasalle, an international property consulting house.

"More multinationals seek set-ups and expansions in Beijing, the capital of the world's fastest-growing economy, and the 2008 Olympic Games offers more opportunities," said Anna Kalifa, Jones Lang LaSalle's head of research in Beijing.

Beijing is becoming a cleaner and more sophisticated city as a result of the event, said Kalifa, who wrote the report..

"Considering the massive infrastructure projects coming to the city, notably the series of new metro lines, airport light rail and expressway, the long term outlook for the city is incredibly positive," said Kalifa.

Last year, there were more than 7,500 luxury units delivered to the luxury residential market, while the figure is expected to be 4,000-plus this year and 3,200 in 2007.

Though the number of units has decreased, the quality of the housing will improve and the property value will increase in the next two years, according to the report.

Chaoyang Park, located at the East Third Ring Road beside the city's Central Business District (CBD), and further east of the Chaoyang district will be the site of most of the luxury units.

The report also forecasted that Sanlitun, a hub of foreign embassies, and Chaoyang Park will be hot for apartments, while the Shunyi area near Capital International Airport will be popular for villas.

However, the report predicts that, owing to the climbing rental demands, luxury residential landlords will face both challenges and opportunities.

So far, investors are estimated to make up about 20 percent to 35 percent of luxury projects in Beijing.

The vacancy rate currently stands at about 27 percent for the luxury apartment sector, which will hover between 20 to 24 percent over the next three years.

(China Daily March 2, 2006)