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China's largest industrial city is cracking down on real estate speculators who are leaving their property vacant simply to wait for a chance of selling the land for a higher return.
The move is the latest of a string of measures in the past few weeks to strengthen supervision of land usage throughout the city in the wake of the recent business scandal involved the richest businessman in Shanghai -- Zhou Zhengyi.
City land authorities yesterday said that property dealers should develop the land they have obtained in a given period of time, usually two to three years.
Strict punishment will be exacted if such requirements are ignored, they said.
About 50 million to 100 million square metres of such unused land is spread throughout the city, experts estimate.
The problem is likely to be more serious than originally expected, said Wu Xiuyi, deputy director of the Development Research Centre of Shanghai Municipal Government.
The Shanghai Municipal Land and Housing Resources Administration did not confirm the figure, but admitted that the regulation work is going on in each district and it would publicize its progress later on.
A local newspaper revealed that more than 50 hectares of land has been claimed back.
"As the real estate industry contributes more and more to the city's economy, the government has been taking measures to prevent land being left undeveloped to later sell it at a higher price," Wu said.
"The achievement is very limited as the land stays in the charge of the district-level and municipal government, both of which has different priorities," he explained.
As national resources, land should be solely controlled by the municipality, according to Gu Jianfa of the Real Estate Industry Research Centre with the Shanghai Academy of Social Sciences.
To achieve the goal, in late 2002, the Shanghai Land (Group) was established with a registered capital of 4 billion yuan (US$484 million), the largest ever real estate developer the municipality has invested in.
"It will take a long time for the group to see significant achievements as investors in the giant venture have different backgrounds and interests," Gu said.
Since 2001, Shanghai started to adopt public bidding to lease its land of certain categories, but until 2002, about 90 per cent of deals completed were conducted in secret, which violated the rules of the market economy, Gu said.
He revealed that the government will soon launch new policies to include land of all categories such as land for old urban renovation or major infrastructure construction to increase transparency and fairness.
Wu and Gu agreed that the key to regulate the industry is to enforce the implementation and supervision.
The housing loan policies recently issued by People's Bank of China and to be implemented by local banks will help to keep the real estate industry above board.
"The industry will remain stable thought the high-end market might be influenced because of the strong market demand," said Edward Cheung, general manager of DTZ, an international property consultancy company.
(China Daily July 2, 2003)
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