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.