April 12 is the deadline for 78 state-owned enterprises (SOEs), whose core business is not real estate, to submit plans for withdrawal from the housing market. Many are hawking projects around potential buyers who include both private developers and 16 state-owned property companies.

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Who will take over?

With the 15-day deadline set by the State-owned Assets Supervision and Administration Commission (SASAC) drawing near, most of the 78 SOEs have started to approach potential buyers including the 16 centrally-administered SOEs whose core business is property development.

According to Shanghai Securities News, major state-owned property companies Poly Real Estate, COFCO and China Merchants Group are already in talks with sellers. Poly Real Estate plans to take over two publicly listed property projects.

The newspaper cited an executive with China Merchants Group as saying the group is in the market for good quality projects, since it "has plenty of cash and nowhere to invest it."

An executive with E-house (China) said "money would not be an issue" for SOEs like Poly Real Estate, COFCO and China Merchants Group.

Private developers are also potential customers but many have concerns over purchasing property from the 78 SOEs.

"Several SOEs have approached us to sell property projects," said Zhong Kun Group board chairman Huang Nubo, "but so far we don't see any possibility of cooperation with them."

Transferring the projects may not be simple. In many cases initial land acquisition prices were high, and the transfer prices are well above market levels.

Some projects also have strings attached which could complicate land transfer process and future construction. For example, some projects were joint ventures between SOEs and local governments, with the former taking on responsibilities originally belong to the latter, including demolition and relocation issues.

Not yet time to cheer SOE exit

SASAC's instruction to SOEs to exit the property market was taken to mollify public dissatisfaction over soaring real estate prices, but it will not mean an end to heavy state involvement in the market.

According to SASAC, the 78 SOEs own just 15 percent of state-owned real estate; the 16 state-owned property companies hold the remaining 85 percent.

Analysts say that even if the 78 SOEs quit the property market, it will make little difference to surging property prices.

"If the 78 SOEs exit the property sector by restructuring and property transfers, won't this just intensify the monopoly of the remaining 16 SOEs?" said financial analyst Su Peike.