Tomson Riviera, the most expensive apartment complex in Shanghai, is up against a crusade. But it is a crusade that is unlikely to help slow rising property prices, as authorities expect. It may, in fact, violate the principles of a market economy.

 

The Shanghai Housing, Land and Resource Administration Bureau recently announced a probe into several luxury property projects, including Tomson Riviera, on the east bank of the Huangpu River.

 

Tomson Riviera, which sells for an average of 110,000 yuan per square meter, is suspected of falsely reporting sales and hoarding apartments to speculate on higher prices. But Tomson Group, the property developer, has denied any illegal activity.

 

The high-rise apartment buildings have been a target since they hit the market in October 2005. Just three apartments, worth 284 million yuan, have been sold so far.

 

Tomson Riviera went on sale at a time when the government launched a campaign to cool down the red-hot property market. That campaign has been ineffective, and the market has continued to climb - just last month, 70 major Chinese cities reported an average housing price increase of 6.4 percent.

 

The administration is still investigating whether Tomson Riviera's developer did anything illegal, but it continues to be used as a scapegoat for the price hikes.

 

What the government should be concerned about are the out-of-control prices of residential projects for ordinary home buyers.

 

Projects like Tomson Riviera are aimed at the super rich. They are few and their steep prices are not what's driving average home buyers crazy.

 

It is just like an Armani suit with a price tag of 60,000 yuan. More than 99 percent of the population would think it's outrageous.

 

(China Daily June 22, 2007)