Who wants to live in a city where the air pollution is so bad that it is damaging to the health of your family? That is the question that confronts the citizens of Beijing. The smog was so bad during January that it was referred to as "airpocalypse" or "airmageddon".
On January 12, the index for airborne particulate matter smaller than 2.5 microns in diameter (PM 2.5) reached 886 micrograms per cubic meter, about 35 times the guideline set by the World Health Organization. These particulates contained a “complex mixture of solid and liquid particles of organic and inorganic substances” that contribute to cardiovascular and respiratory diseases, and lung cancer.
While the elevated levels of smog only lasted for 20 days, it seems likely that air pollution will get even worse in the future and that Beijing's blackest day is still to come (as predicted by Oilprice.com). While the P.M 2.5 level returned to levels below 20 in early February, a combination of a sandstorm and smog raised the level back to 500 again on February 28.
The wealthiest residents of Beijing (and presumably government officials) are purchasing pricey air purifiers and sending their children to the elite schools that can afford expensive air filtration systems. However, this does not seem like a very desirable long term solution for those with sufficient financial resources to leave Beijing and is not a viable solution at all for the vast majority of the population.
While most of the 20 million residents of Beijing have little choice but to remain in the city due its position as China's political, cultural, and economic center, and headquarters city for many of China's state owned companies, at least a small exodus may be in the offing. So far, despite the pollution, housing in Beijing remains tight. Thus, at present there is no basis to support speculation that the air pollution levels will lead to a population exodus However, as the problem worsens, there is certainly the potential for an out migration to occur among those that have the wherewithal to leave the city. And if this exodus occurs, the real estate market will stumble.
It may be that the bigger short term threat to the Beijing real estate market is China's recently implemented property curbs. However, if smog inversions become more common, it would be a serious threat to the real estate market.
Time will tell if the cost of residential real estate in the prime areas of Beijing remain at $1,600 a square foot. However, current prices seem insane for real estate in a city which already is having bouts of toxic air quality and is likely to have more in the future.