The days of developers sitting on large parcels of real estate and selling small lots while awaiting a property upturn may be numbered.

The Shanghai housing watchdog has initiated tough new rules designed to stamp out the practice.

Developers of new residential properties with an aggregate built-up space of under 30,000 square meters ready for pre-sale are now required to launch their sales activities in one batch, according to housing authorities.

And under the latest regulations announced by the Shanghai Housing and Land Resources Administration Bureau, new residential properties which have an aggregate built-up space of more than 30,000 square meters ready for pre-sale should introduce at least 30,000 square meters of new houses to the market at one time.

"The rule, probably the toughest of its kind introduced so far by the local government, is supposed to help ease the current tight market supply to some extent because many developers deliberately prolong their sales period as housing prices continue to go north in the city," said Xue Jianxiong, head of research at the Shanghai Youwin Real Estate Information Service Co Ltd.

It is no secret among industry insiders that developers - big and small - prefer to sell properties in small amounts at one time, even though much more is available for pre-sale.

In many cases, only dozens of units are introduced to the market at one time, and it is not uncommon for sales periods for some new residential projects to last as long as several years.

"It is ubiquitous that developers hold onto their properties or postpone their pre-sale launch," said Christine Zhao, a 31-year-old finance manager who has been seeking a three-bedroom apartment for months within the city's Outer Ring Road.

Her search has thus far been in vain.

In a bid to stabilize the local real estate market, which has been plagued by continuously rising prices, the city's regulators have been increasing efforts to crack down on illegal practices in property development and sales.

The bureau has set up a project-monitoring center to track all real- estate development in the city's 18 districts and one county.

Heavy penalties apply for illicit activities and false advertising.

(Shanghai Daily September 4, 2007)