Beijing Says “No” to “Land Kings” amid Concerns over Overheated Market

Beijing Says “No” to “Land Kings” amid Concerns over Overheated Market

09-29 14:57 Caijing

Land Kings have re-emerged in big cities like Beijing and Shanghai over the last few months as rising house prices fan hopes of a recovering market. China’s Ministry of Land Resources (MLR) is calling a halt to land kings as he warns about soaring housing prices promoted by activities in the country’s overheated real estate market. No new land kings shall be seen within the year, said Hu Cunzhi, the deputy minister while ordering first-tier cities to increase residential house supplies to tame prices. Hu made the remarks at a meeting gathering land regulators from 16 Chinese cities last Sunday, the latest of six such meetings to address surging land prices over the last three years.

Land Kings have re-emerged in big cities like Beijing and Shanghai over the last few months as rising house prices fan hopes of a recovering market.

Hu accused some local governments of tacitly allowing, even backing developers to push up land prices under mounting debt pressure. Revenue from selling land surged by 49.4 percent on a yearly basis to reach 2trillion yuan ($327billion) in the first seven months, statistics from Centaline, a Hong Kong-based property agency showed.

Most of this year’s land kings could have been avoided if local governments reined in the pace of land-selling activities, Hu noted.

Both Beijing and Shanghai’s record in property land deals were broken in early September as Hong Kong-listed Sunac China Holdings Limited acquired a plot of land in the northeastern Beijing at a price of 73,000 yuan a square meter while Sun Hung Kai & Co won a bid for a central land project in Xu Jiahui in Shanghai, at prices equivalent to 37,264 yuan a square meter with a premium of 24.4 percent.

As the property market is getting hotter, measures including restrictions on housing and land prices were introduced in the two cities and other provinces like Jiangsu and Anhui.

Analysts, however, contend that none of those measures would be truly effective in curbing the country’s real estate as long as government still rely on selling land for collecting revenue since they have limited tax resources.

Rural land reform has again become a hot topic ahead of the third plenary session of the 18th CPC Central Committee, a key meeting expected to herald major reforms of the new leadership.

China needs to speed up reform of land policies, said Vice Minister of Finance Wang Bao’an said in a statement on the ministry’s website Tuesday.

The current land system, which lets local governments fund their operations through the sale of land use rights to developers and corporations, promotes wasteful use of land, Wang said.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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