A local real estate developer is proposing the government suspend urban renovation in downtown areas to ease a severe shortage of affordable housing for residents forced to relocate due to urban construction.

"Concerned with high-flying housing prices and increasing social problems brought about by relocation, I suggested the city government suspend re-constructing old areas for the three to five years," Ji Baohong, chairman of Shanghai Wangyuan Real Estate Development Company, said yesterday.

Three weeks ago, Ji submitted his proposal to the city government during the annual plenary session of the Shanghai People's Congress.

He stressed in the proposal that many relocated residents can't afford to buy decent homes.

"Although the government has promised to construct 3 million square meters of affordable housing for relocation use every year, that can hardly meet the requirement of 80,000 relocated families," he said.

Affordable housing refers to apartments sold for less than 3,500 yuan (US$422) per square meter.

Average housing prices in the city rose almost 25 percent last year, according to the Shanghai Statistics Bureau, which wouldn't provide detailed figures. Earlier figures showed that the city's average home price was 4,553 yuan per square meter at the end of 2002.

That figure is well beyond the means of most relocated residents, many of whom are low-paid, unemployed or retired.

Ji said suspending renovation of old homes will help put a leash on soaring housing prices.

He also argued that residents relocated from downtown to suburban areas face higher transportation costs, which many can't afford.

"If one earns 800 yuan every month, he will probably spend 15 to 23 percent of his salary on buses and subways," Ji added.

Lin weihang, a researcher of historic architecture at Tongji University, supports the proposal.

"The government has to stop renovating old houses. If not, the city will lose most of its heritage buildings sooner or later," he said.

He notes the city had some 3,000 shikumen lanes, old-fashion traditional stone and brick residences, in 1949. "Now, with rapid urban renovation, especially since the 1990s, more than two thirds of them have been pulled down."

"At such speed, the remaining old lanes will die out within the next decade," he added.

Not everyone supports the proposal, however,

Long shengping, a professor in the Oriental Real Estate Institute at East China Normal University, said: "Suspension of urban relocation won't necessarily slow down rising housing prices, as the families involved account for only a small part of the home buyers in the market."

"Most families living in the dilapidated areas have low income, and they are incapable of improving their living conditions. The relocation project may be their only hope," he added.

Industry analysts say that district governments around the city need to renovate old areas to improve the living and investment environment under their jurisdictions.

"The district governments need developers to help improve the areas' environment. Thus the proposal is unlikely to be approved," one analyst who requested anonymity said.

The housing market has been booming since 2001 when the city government exempted developers for certain land leasing fees, which accounted for 30 percent of land prices. Developers are required, however, to spend those savings on relocated families.

Last year, 11.65 million square meters of old buildings were renovated, according to the government. By comparison, only 3.65 million square meters were renovated from 1992 to 2000.

The shanghai government has announced plans to relocate 80,000 families from downtown this year.

(eastday.com February 4, 2004)